Lithuania

ENIn many European countries, a suretyship is traditionally defi ned as a contract between the principal creditor and a surety which is aimed at securing payment of the principal debtor’s debt. A surety is a secondary debtor whose liability depends upon the liability of the principal debtor. However, the legal construction of this kind of transaction slightly diff ers in Lithuania. The new Civil Code of the Republic of Lithuania (hereinafter CC), which came into force as of 1 July 2001, specifi cally regulates two forms of personal securities: the ‘suretyship’ (laidavimas) and the ‘guarantee’ (garantija). The guarantee is not a contract but a unilateral deed. Both the suretyship and the guarantee under the CC correspond to the traditional European concept of suretyships in so far as they are aimed at guaranteeing the fulfi lment of contractual obligations in the event of default by the principal debtor. In Lithuanian practice, the terms ‘suretyship’ and ‘guarantee’, are often used interchangeably to describe available tools of personal security. In this report the term ‘suretyship’ refers both to the ‘contract of suretyship’ and to the ‘deed of a personal guarantee’, except where explicitly indicated otherwise. With respect to the diff erent extents of liabilities under a suretyship and under a guarantee under Lithuanian law, the creditor would prefer to secure a debt by concluding a contract of suretyship. Therefore, suretyships are more commonly used than guarantees.