The provisions on guarantee from Article 335 to Article 343 of the Civil Code are as follows:
Subsection 6. Guarantee
Article 335. Guarantee
1. A guarantee means that a third party (hereinafter referred to as the guarantor) undertakes with the obligee (hereinafter referred to as the guarantee beneficiary) to perform the obligation on behalf of the obligor (hereinafter referred to as the guaranteed party), in the event that upon the due date of performance the guaranteed party fails to perform or improperly performs the obligation.
2. The parties may agree that the guarantor shall only be required to perform the obligation on behalf of the guaranteed party if the guaranteed party is incapable of performing the guaranteed obligation.
Article 336. Scope of guarantee
1. The guarantor may undertake to guarantee part or all of the obligations of the guaranteed party.
2. The guaranteed obligation includes principal debt interest, fines, compensation for damage, and interest on late payment, unless otherwise agreed.
3. The parties may agree to use security by property to secure the performance of the guarantee obligation.
4. Where the guaranteed obligation arises in the future, the scope of the guarantee shall not include obligations arising after the guarantor’s death or after the guarantor being a juridical person ceases to exist.
Article 337. Remuneration
The guarantor is entitled to remuneration if so agreed with the guaranteed party.
Article 338. Multiple guarantors
Where multiple persons jointly guarantee an obligation, they shall be jointly liable to perform the guarantee, unless otherwise agreed or provided by law that the guarantee is divided into separate parts. The obligee may request any of the joint guarantors to perform the entire obligation.
Where one of the joint guarantors has performed the entire obligation on behalf of the guaranteed party, that guarantor has the right to request the remaining guarantors to perform their respective shares of the obligation to him/her.
Article 339. Relationship between the guarantor and the guarantee beneficiary
1. Where the guaranteed party fails to perform or improperly performs its obligation, the guarantee beneficiary has the right to request the guarantor to perform the guarantee obligation, unless the parties have agreed that the guarantor shall only be required to perform the obligation if the guaranteed party is incapable of performance.
2. The guarantee beneficiary shall not request the guarantor to perform the obligation on behalf of the guaranteed party before the due date of the obligation.
3. The guarantor is not required to perform the guarantee obligation where the guarantee beneficiary may set off its obligation against the guaranteed party.
Article 340. Right of recourse of the guarantor
The guarantor has the right to request the guaranteed party to perform the obligation toward him/her within the scope of the guarantee obligation already performed, unless otherwise agreed.
Article 341. Exemption from performance of guarantee obligation
1. Where the guarantor is required to perform the guarantee obligation but the guarantee beneficiary exempts the guarantor from performance, the guaranteed party shall not be required to perform the obligation toward the guarantee beneficiary, unless otherwise agreed or provided by law.
2. Where only one of multiple joint guarantors is exempted from performing his/her part of the guarantee obligation, the remaining guarantors shall still be required to perform their respective obligations.
3. Where one of multiple joint guarantee beneficiaries exempts the guarantor from performing part of the obligation toward him/her, the guarantor shall still be required to perform the remaining obligation toward the other joint guarantee beneficiaries.
Article 342. Civil liability of the guarantor
1. Where the guaranteed party fails to perform or improperly performs its obligation, the guarantor must perform such obligation.
2. Where the guarantor fails to properly perform the guarantee obligation, the guarantee beneficiary has the right to request the guarantor to pay the value of the breached obligation and compensate for damage.
Article 343. Termination of guarantee
A guarantee shall terminate in the following cases:
1. The guaranteed obligation terminates.
2. The guarantee is cancelled or replaced by another security measure.
3. The guarantor has performed the guarantee obligation.
4. As agreed by the parties.
The above Subsection is guided by Subsection 7, Section 1, Chapter III of Decree No. 21/2021/ND-CP, effective as of May 15, 2021.
Subsection 7. GUARANTEE
Article 43. Agreement on guarantee
1. The guarantor may agree with the guarantee beneficiary on the application of security by property to secure the performance of the guarantor’s obligation.
2. Where the guarantor undertakes to perform work on behalf of the guaranteed party, the guarantor must have civil legal capacity and civil act capacity appropriate to the guaranteed obligation.
3. An agreement on guarantee may be made in the form of a separate guarantee contract, a letter of guarantee, or another form of guarantee undertaking.
Article 44. Performance of guarantee obligation
1. The guarantor must perform the guarantee obligation when the guaranteed obligation is breached on any of the following grounds:
a) The guaranteed party fails to perform the obligation on time;
b) The guaranteed party fails to perform the obligation prior to the due date as agreed;
c) The guaranteed party performs the obligation incompletely;
d) The guaranteed party improperly performs the content of the obligation;
đ) The guaranteed party is incapable of performing the obligation as provided in Clause 2 Article 335 and Clause 1 Article 339 of the Civil Code;
e) Other grounds as agreed or as prescribed by the Civil Code or other relevant laws.
2. In cases falling under Clause 1 of this Article, the guarantee beneficiary shall notify the guarantor to perform the guarantee obligation. The guarantor has the right to refuse performance where the grounds notified by the guarantee beneficiary are not within the scope of the guarantee commitment.
3. The guarantor must perform the guarantee obligation within the agreed time limit. Where no agreement exists, the guarantor must perform it within a reasonable time from the date of receipt of the notification from the guarantee beneficiary.
4. After the guarantor has performed the guarantee obligation, the guarantee beneficiary must notify the guaranteed party thereof. Where the guaranteed party nevertheless performs the guaranteed obligation, the guarantor has the right to request the guarantee beneficiary to return the property received or the value corresponding to the part of the guarantee obligation already performed.
