Section 680: Suretyship, definition

Supreme Court decisions interpreting this section

1. Supreme Court Judgment No. 4298/2561 (2018)

   A surety who signs the guarantor line without stating a guaranteed sum gives an unlimited suretyship and is liable for interest, compensation and charges accessory to the obligation under sections 680 paragraph one and 683; a note written on a copy of his identity card does not confine the guarantee. Absent wording accepting liability as a joint debtor, however, he is liable only if the principal debtors fail to pay.

   Defendant 3 signed the guarantor line at the foot of a land-filling contract and wrote on a copy of his identity card that it was for use as guarantee for the land-filling work only. The Court held that he had bound himself to the creditor to satisfy the obligation if defendants 1 and 2 did not, and because no guaranteed sum was stated the suretyship was unlimited, extending to interest, compensation and accessory charges under sections 680 paragraph one and 683. When defendants 1 and 2 defaulted and the plaintiff rescinded, they had to return the deposit and pay the extra cost of hiring another contractor, 1,379,700 baht in all, with interest under section 391. Nothing in the contract or the note showed that defendant 3 had accepted liability as a joint debtor, so his liability arises only if defendants 1 and 2 fail to pay.

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2. Supreme Court Judgment No. 3583/2562 (2019)

   A bank guarantee by which the issuer binds itself unconditionally and irrevocably to pay on demand, in the same manner as a primary debtor and without the beneficiary having to claim against the contractor first, is not an undertaking to perform if the debtor fails to. It is therefore not a suretyship under section 680 but an ordinary contract governed by its own terms, and the suretyship provisions do not apply to it at all.

   Under the guarantee the plaintiff bank bound itself unconditionally and irrevocably, in the same manner as a primary debtor, to pay the employer up to 179,447,022 baht if the joint venture caused any loss under the construction contract, waiving any objection and without the employer having to claim against the contractor first. The Court held this was not an undertaking to perform if the debtor did not, so it was not suretyship under section 680 but an ordinary contract enforceable on its own terms and to be considered separately from the construction contract, in accordance with banking practice; it was therefore not an unfair contract term. The application to issue the guarantee likewise bound the joint venture directly rather than as a surety, so its partners were bound by it. Having paid the employer, the plaintiff was entitled to recover from the joint venture, with the default interest of 15.50% reduced to 13% as a penalty.

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Curated decisions with case numbers verified against the Supreme Court database. English renderings are the firm's editorial translation for study.