Remodeling consumer protection in European contracts of guarantee

In banking market the guarantees by individuals for non-business purposes need an enforcement of consumer protection. Indeed, it could be really difficult to improve guarantor’s protection because European case-law admit a consumer protection only if the debtor under the principal contract does not qualify for consumer protection. The main aim of the paper is to demonstrate that the guarantor could benefit from consumer protection even if the guarantee related to a contract for the supply of goods or services to a person acting in the course of a business and even if the security is independent. The paper compares judicial decisions from the Court of Justice of the European Union with recent model rules of Surety Law proposed in the Draft Common Frame of Reference (DCFR). International and European principles in Consumer and Surety Law are examined systematically to identify the foundation in law for the application of consumer protection to security provider. The paper offers a critical review of the “rebound” interpretation provided by the case-law which excludes from the consumer protection the guarantor when the principal contract is business to business on the basis of the ancillary nature of the contracts of guarantee. The present case-law is based on dependent guarantee and should not be applied to protect a consumer in independent guarantee. This type of interpretation in contrast with the proper functioning of the market prevents from achieving a high level of consumer protection. The consumer protection should be applied both when the guarantee is dependent and when it is independent because the protection is founded on the basis of the guarantor’s situational position. The main outcome of the paper is to offer an effective protection for consumers in individual’s guarantees and suggest the necessity of specific rules for personal security of consumers. Keywords: Guarantee, Consumer, Security, Bank