Explanation of Article 604
The article addresses the provisions related to the termination of the guarantee, which in this regard are of two types:
The first type: Termination of the guarantee due to the termination of the guaranteed debt, where the guaranteed debt has been terminated for one of the original reasons for the termination of the debt; consequently, the guarantee is terminated, whether by payment, release from the creditor to the debtor, set-off, merger of obligations, renewal of the debt, delegation, or otherwise, as stipulated in Article (580); this is because the guarantee is an accessory contract, not independent by itself; it should be noted that the termination of the debt does not lack two cases:
The first case: The debt is terminated entirely; in this case, the guarantee is terminated entirely.
The second case: The debt is terminated partially; in this case, the guarantee is terminated partially to the extent that the debt is terminated; this ruling includes the scenario where the debtor is released from part of the debt by settlement; the guarantor's obligation ends to the extent that the debtor is released, and the guarantor remains obligated for the remainder; this also includes the scenario where the debtor is released from the debt according to the bankruptcy system; in this case, the guarantor is released to the extent that the debtor is released from the debt; the guarantor remains obligated for the remainder, except that the article clarified that the guarantee does not terminate in this case if the debtor has become insolvent; the reason for this is that the guarantor has guaranteed the debt; it is assumed that the guarantee was due to the fear of the debtor's insolvency and bankruptcy; if the debtor goes bankrupt, there is no reason for the guarantor's release, as this is the purpose for which the guarantor guaranteed the debtor.
It should be noted that the guarantee does not terminate in all cases where the debtor is released from the guaranteed debt; as if the creditor releases the debtor from the debt, or they settle on that; in this case, the guarantee is terminated.
The second type: Termination of the guarantee not by the termination of the guaranteed debt, but for reasons specific to the guarantee only while the guaranteed debt remains with the debtor; the provisions related to this have been previously stated in Articles (588), (589), (590); which are the release of the guarantor from the creditor, or the release of the guarantor's obligation due to the creditor's failure to demand the debtor after the debt is due, or the release of the guarantor's obligation due to the creditor's failure to participate in the debtor's asset liquidation procedures.
The ruling in this article is not of public order; it is permissible to agree otherwise; the agreement between the debtor and the guarantor must not harm the rights of the creditor.
Related To
Article 604
If a creditor accepts a thing other than the actual debt in payment of the debt, the surety shall be discharged therefrom even if such thing is proven to be owned by a third party.