The relationship between the secured debtor and the guarantor does not apply to the beneficiary of the first-demand guarantee. The guarantor can request the fulfilment of the guarantee if the conditions agreed in the guarantee are met without it being necessary to have the original document to use it.
A limited company claimed a payment of €750,000 from Caja Madrid in fulfilment of a first-demand guarantee securing the payment of the deferred price of the sale of an immovable property. The guarantee had been deposited with a notary. The day before the guarantee’s expiry, the seller had claimed payment of the price from the buyer, evidencing fulfilment of the conditions established in the agreement. The buyer did not pay the deferred price and, on the last day of the payment of the price, it withdrew the guarantee and returned it to the guarantor. Given the buyer’s non-fulfilment, the seller requested payment from Caja Madrid, which claimed that the guarantee had been cancelled in financial terms and that the original document was in its possession. The first instance judgment, confirmed under appeal, ordered Caja Madrid to pay the amount of the guarantee plus interest. The judgment was appealed before the Supreme Court, which dismissed the cassational appeal and extraordinary appeal for breach of procedure.
According to the Supreme Court, the first-demand guarantee should be considered, despite any differences, to be a personal guarantee (fianza) with certain specifics. Citing prior case law, the Supreme Court stated that the nature of the first-demand guarantee “is that of generating an immediate guarantee obligation that loses its classification as accessory to the main obligation -in contrast to a personal guarantee (fianza)-, in which the guarantor’s obligation is independent of the secured party’s obligation and of the initial agreement (…), so that the guarantor cannot raise before the beneficiary of the guarantee, reclaiming payment, any exceptions other than those arising from the guarantee itself.” The provision of the guarantee by Caja Madrid, and its acceptance by the beneficiary (the seller) led to a contractual relationship between the two to which the buyer is not a party. The relationship between Caja Madrid and the buyer does not apply to the beneficiary of the guarantee, which can reclaim its fulfilment and render the guarantee effective if it meets the conditions agreed in the guarantee. In this specific case, it was considered that the conditions were met to render the guarantee effective. Moreover, it was declared that it was not necessary for the beneficiary company to have the guarantee to use it, because this was not agreed in the guarantee. As in the case of personal guarantees, the principle of the freedom of form governs its granting.