Explanation of Article 583
The article refers to the future debt that has not yet been incurred by the debtor; because even though the debt does not exist at the time of entering into the guarantee contract, it is capable of existing, thus fulfilling the condition for the validity of the subject matter of the obligation. For example, a person may guarantee another in the transactions they wish to enter into with a specific store; the paragraph requires for the validity of this that the amount guaranteed be specified in advance, either by determining the amount or by setting valid criteria for its determination, such as setting an upper limit. For instance, the guarantor may guarantee the buyer for the price of transactions they enter into with the store up to a limit of one hundred thousand riyals; this is because one of the conditions for the validity of the subject matter is that it be specified or capable of being specified, providing protection for the guarantor so they do not become involved in guaranteeing a debt of unknown amount.
The determination of the amount of the future debt guaranteed may be explicit or implicit, derived from the circumstances of the contract; as customary practice or previous dealings between the contracting parties may determine the guarantee of the future debt in the debtor's liability for a specific amount. If there is no explicit or implicit agreement, the guarantee is not valid due to the absence of its validity condition.
The second type: the debt contingent upon a condition, whether it is a suspensive or resolutory condition. In this case, the guarantee is valid and follows the guaranteed debt in effect and termination; if the guaranteed debt is contingent upon a suspensive condition, such as the guarantor guaranteeing the seller's obligation to transfer ownership of the sold item, and the seller's obligation is contingent upon the buyer's payment of the price; if the suspensive condition fails due to the buyer not paying the price, the seller's obligation is nullified, and consequently, the guarantor's obligation is nullified retroactively. If the suspensive condition is fulfilled, the seller's obligation is executed accordingly, and consequently, the guarantor's obligation is executed retroactively as well.
If the guaranteed debt is contingent upon a resolutory condition, such as the guarantor guaranteeing the buyer's obligation to pay the price in a sale with a trial condition; if the resolutory condition fails because the buyer did not approve the sold item during the trial period, the sale becomes final, and consequently, the guarantor's obligation becomes final. If the resolutory condition is fulfilled because the buyer rejected the sold item, the sale is rescinded retroactively, and consequently, the guarantor's obligation is nullified retroactively as well.
The second paragraph refers to the general principle in guarantee, which is that the guarantor cannot withdraw from it, except that the paragraph stipulates the permissibility of the guarantor withdrawing from the future debt guarantee under conditions:
First condition: No duration for the guarantee has been specified; if a duration is specified, the guarantor cannot withdraw from it even if the debt has not been incurred.
Second condition: The guarantor must inform the creditor of their withdrawal from the guarantee before the debt is incurred with sufficient time. Accordingly, the guarantor's guarantee for a specific future debt amount does not materialize under three scenarios:
- First scenario: A duration for the guarantee is specified; for example, a trader guarantees what may be due from the debtor for the price of transactions the debtor enters into with the trader within a month from the date of the guarantee, up to a limit of one hundred thousand riyals; the guarantor is bound by their guarantee and cannot withdraw from it.
- Second scenario: No duration for the guarantee is specified, and the guarantor withdraws and informs the creditor of their withdrawal before the debt is incurred with sufficient time; their withdrawal is valid whether the period between their withdrawal and guarantee is long or short, and the guarantee is nullified retroactively.
- Third scenario: No duration for the guarantee is specified, and the guarantor does not withdraw; the duration is determined by custom, in accordance with general rules, as silence on specifying the duration cannot be interpreted as an eternal commitment; it can only be interpreted according to custom, like any deferred obligation where the contracting parties have remained silent on specifying its term; it is determined by custom, as in Article (271) of the general rules; this is confirmed in guarantee, as the obligation is solely on the guarantor, and the rule is that in case of doubt, the condition is interpreted in favor of the one who bears its burden, as stipulated in Article (101).
Related To
Article 583
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A suretyship may be made for a future debt if the amount is determined in advance, as well as for a conditional debt.
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If the surety for a future debt does not specify a term for the suretyship, he may terminate the suretyship, provided that he notifies the creditor of such termination in a timely manner before the debt becomes due.