July 2023 – Judicial Annulment of Guarantee Agreement

Recognition of the invalidity of the guarantee agreement in a credit agreement with an open account due to forgery of the signature. Limitation of the guarantor’s liability in a credit agreement with an open-end correspondent account. Award of an amount as compensation for non-material damage.

The credit agreement of July 1997 had been concluded between the bank and the debtor (general parntership company) by means of an open mutual account. An additional deed to the above credit agreement was drawn up on the same day, with the applicant, our principal, among others, as guarantor. Subsequently, up to November 2001, five additional acts followed, which increased the credit limit to the amount of 81,500,000 USD. The opposing bank claimed that in November 2001 another guarantee agreement was allegedly concluded between our client and the bank, whereby the bank assumed that guarantor responsibility for the fulfilment of the obligations arising from all of the above additional acts was undertook by our client. After the termination of the credit agreement, a Payment Order was issued, whereby the bank requested our client (as the alleged guarantor) to pay the amount of €240,000 as part of the total claim of €490,500.

The Court, however, held that: “From an assessment of all the evidence adduced before this Court, it is clear that the alleged signature of the plaintiff put on the guarantee agreement dated on 28/11/2001 is forged as it was not put by the plaintiff, nor was it put by her, nor on her authority or by her power of attorney. In particular, the expert handwriting report of the expert forensic handwriting expert (…) shows that the signature on the guarantee agreement of 28 November 2001 has numerous and significant differences in terms of handwriting in relation to the applicant’s signature, as is apparent from the comparative material referred to in the report, which are as follows: (…)”. It was further held by the Court that: “(…) even between the holographic signature under examination and the plaintiff’s sample handwriting, the different character of the engravings is evident”. In the conclusion of the forensic graphologist: “the signature under examination (…) does not meet the requirements of authenticity and is therefore not a genuine signature of the person who signed it, but was engraved by a third person unknown to the applicant, with only an approximate and imitative attempt to imitate her signature”. Therefore, the Court of Justice, after not taking into account the private opinion of the bank, since it was not considered convincing, held that: “it is proven that the signature on the guarantee agreement of 28/11/2001 is forged, as it was not put by the plaintiff’s hand. Moreover, there is no evidence that the applicant authorised a third party to sign in her place (…) or that she subsequently authorised that action. It must therefore (…) be held that the guarantee given by the applicant is invalid’. Thus the partial annulment of the guarantee agreement was achieved.

With regard to the guarantee’s liability of our client under the guarantee’s agreement signed in July 1997, the Court accepted the limitation of the guarantor’s liability to the amount of 14.673,51€. It was held that the guarantor of the creditor’s claim for payment (by the debtor of the balance arising from the operation of a credit agreement with an open account) was liable up to the amount for which a guarantee was given, irrespective of the conclusion of numerous additional transactions to increase the credit limit, since it did not contract as guarantor in any additional transaction.

Further, it was held that the forgery of our client’s signature was achieved “due to gross negligence shown by the defendant’s appointed employees, who, in breach of good faith and banking practice, acted negligently and without the care required by the circumstances in the performance of their duties“. According to the Court, our client has suffered moral damage, consisting of the mental distress, anxiety and suffering caused by the fact that she is alleged to be the debtor of an enormous sum of money, which unduly burdens her property and makes her insolvent before third parties, and for the recognition of the non-existence of which she has had to undergo legal proceedings. Accordingly, she was awarded the sum of EUR 5 000 as compensation for non-material damage.