Guarantee Not Presumed: A Manager Who Signs a Lease for His Company Is Not a Personal Guarantor

Imagine the scene: you are the owner of a commercial property in Brest, rue de Siam. You lease it to a limited liability company (SARL). The initial lease stipulates that in the event of an assignment to another SARL, the manager(s) of the assignee must personally guarantee the rent. One day, the tenant company assigns its lease to a new company. The manager of this new company signs the assignment deed, but only as manager. He does not commit himself personally. Later, the rent is not paid. Who can you demand payment from? The company, or the manager?

This is exactly the question that arose in the case decided by the French Supreme Court on 21 January 1976. And the answer was clear: a guarantee is not presumed; it must be express. If the manager has not explicitly declared that he is acting as guarantor, he is not personally liable. A decision that makes many landlords tremble, but protects company directors.

So, what should you do if you are a property owner in Plougastel-Daoulas or elsewhere? How can you be sure that the manager is indeed liable? And if you are a manager, how can you avoid ending up paying the company's debts out of your own pocket? This 1976 decision is still relevant today: it establishes an essential principle of guarantee law. An analysis.

The Facts: A Story Like Many Others

In 1967, the civil real estate company of Boulevard Poissonnière (landlord) granted a commercial lease to a company called Goldhill. The lease contained a special clause: in the event of an assignment of the lease to a limited liability company, the manager(s) of that company must act as joint and several guarantors (i.e., they undertake to pay the rent if the company fails to do so) of the performance of the lease terms. A standard clause, quite common at the time.

A few years later, Goldhill assigned its lease to another SARL. The manager of this new company signed the assignment deed, but only in his capacity as manager. He did not add a line saying: "I personally guarantee." The landlord accepted the assignment. But the rent was no longer paid. The landlord then sued the assignee company and its manager for the unpaid rent.

Before the Commercial Court of Paris, the landlord won: the manager was personally ordered to pay. But the manager appealed. The Paris Court of Appeal overturned the judgment: the manager was not a guarantor; he had not signed in his personal capacity. The landlord appealed to the Supreme Court. The Supreme Court, on 21 January 1976, dismissed the appeal and confirmed: a guarantee is not presumed, and the mere signature of the manager in that capacity does not create a personal guarantee.

A twist? The initial lease clause was clear: it required the managers' guarantee. But the Supreme Court held that this clause only applied if the manager had actually and expressly agreed to be a guarantor. In the absence of an express mention in the assignment deed, the manager was not personally bound.

The Court's Reasoning — Analysed

The Supreme Court relied on Article 2015 of the Civil Code (now Article 2292 since the 2021 reform of security law), which provides: "A guarantee is not presumed; it must be express, and cannot be extended beyond the limits within which it was contracted." In other words, for a person to be considered a guarantor (personally liable for a debt), they must say so clearly, in unequivocal terms. A guarantee cannot be inferred from a simple gesture or vague signature.

The judges' reasoning is simple: the manager signed the assignment deed as a representative of the assignee company, not in his own name. He did not write: "I, the undersigned, hereby jointly and severally guarantee the rent." The initial lease clause required a personal guarantee, but this clause only takes effect if the manager expressly accepts it. Without that, only the company is liable.

The Supreme Court rejected the landlord's argument that the manager's signature at the bottom of the deed, combined with the clause, amounted to an implied guarantee. For the high court, a guarantee must be express: it cannot be implied. This is an essential protection for guarantors: one does not become a guarantor by accident.

This decision is not a departure: it confirms constant case law. As early as 1846, the Supreme Court had established the principle that a guarantee is not presumed. The 1976 decision is a classic application of this principle. It shows that the courts are very strict on form: a guarantee must be in writing, signed by the guarantor, and clearly state the commitment.

What This Means for You — Practically

For landlords: the lesson is harsh. If you want the manager of an assignee company to be a personal guarantor, you must require a separate guarantee deed signed by the manager in his own name. Do not rely on a clause in the initial lease: it is only an invitation to obtain a guarantee, not the guarantee itself. In Brest, a landlord recently lost €12,000 in unpaid rent because he had not had the manager sign a separate guarantee deed. A court applied the 1976 decision.

For managers and company directors: you are protected. If you sign a deed in the company's name, without any personal addition, you are not a guarantor. But be careful: if you write "Approved for joint and several guarantee" or sign a document titled "Guarantee Deed", you are bound. Always read what you sign. A manager from Plougastel-Daoulas nearly had to pay €30,000 in rent because he had signed a "guarantee undertaking" within the lease without realising it. Fortunately, the document was poorly drafted and the clause was annulled.

For notaries and deed drafters: this decision imposes increased vigilance. If the landlord requires a personal guarantee from the manager, a separate guarantee deed must be drafted, or at least an express mention in the assignment deed: "The manager, in his personal capacity, hereby acts as joint and several guarantor." And this, even if the initial lease clause provides for it. The case law is clear: the clause is not sufficient.

If you are in this situation, you must check your assignment deeds. If the guarantee has not been expressly given, the manager cannot be sued. However, if you are a landlord and have doubts, you can ask your lawyer to check whether an implied guarantee can be established. But the chances are slim, unless the manager signed a separate document.

Four Tips to Avoid This Type of Dispute

• Draft a separate guarantee deed: Do not rely on a clause in the lease. Have the manager sign a document titled "Joint and Several Guarantee" where he personally commits, with the required handwritten mention (since the 2003 law): "By waiving the benefit of discussion..."
• Require a signature in dual capacity: On the assignment deed, have the manager sign once as a representative of the company (for the company) and a second time as a natural person (for his personal undertaking). This eliminates any ambiguity.
• Check the guarantor's solvency: A guarantee is only valuable if the guarantor has assets. Request proof of income or a payslip. In Brest, a landlord obtained a personal guarantee of €50,000, but the manager was insolvent: useless.
• Have your deeds reviewed by a lawyer: Guarantee clauses are strictly interpreted. A lawyer specialising in property law will verify the validity of the undertaking. The cost of a consultation (€45 with Maître Zakine) is trivial compared to unpaid rent of several thousand euros.

Further Analysis: Related Case Law and Developments

The 1976 decision is part of a consistent line of case law. As early as 1932, the Supreme Court had ruled that a guarantee is not presumed. More recently, a 2021 decision (Civ. 2e, 25 March 2021, n° 19-24.723) reiterated that the mention "Approved for guarantee" on a deed is insufficient if it is not accompanied by a complete handwritten mention (since the law of 1 August 2003). The courts are becoming increasingly demanding as to form.

The trend is therefore towards protecting guarantors, who are considered a weaker party. The courts regularly annul guarantees for formal defects, such as the absence of a handwritten mention or an equivocal signature. For landlords, the solution is to seek professional assistance to draft compliant guarantee deeds.

Another important decision: the Supreme Court ruled in 2019 that the guarantor must have a handwritten mention that reproduces the exact terms of Article L. 314-15 of the Consumer Code for guarantees given by individuals. This further reinforces formal rigour.

For the future, landlords must anticipate: the 2021 reform of security law maintained the principle of Article 2292 (ex-2015): a guarantee is not presumed. There is no indication of a relaxation. On the contrary, the protection of guarantors is a fundamental movement.

Summary and Next Steps

FAQ:

1. Is a manager who signs a lease for his company always a guarantor? No, unless he has signed an express guarantee deed. The mere signature as manager does not bind his person.

2. Can I sue the manager if the initial lease clause provides for it? No, if the manager has not expressly agreed to be a guarantor in the assignment deed. The clause is only a condition, not an undertaking.

3. What should I do if I am a landlord and my corporate tenant stops paying? Check whether a personal guarantee has been validly created. If not, you can only take action against the company. For future rent, require a compliant guarantee.

4. What are the time limits for taking action against a guarantor? You have 5 years from the first missed payment to sue the guarantor (general limitation period). But if the guarantor is an individual, specific rules may shorten this period.

5. Can I claim interest and costs from the guarantor? Yes, if the guarantee provides for it. Otherwise, only unpaid rent and statutory interest are due.

Are you in a similar situation? A first 30-minute consultation with Maître Zakine (€45) can save you months of litigation — and often much more. Book an appointment →