Concept and definition of the defense of prior claim
Die Defense of prior claim is a central term in German civil law and denotes the right of a debtor to require the creditor to pursue another party first before the debtor can be held liable. This legal position chiefly protects accessory debtors (e.g., guarantors or co-debtors) by granting them a subsidiary liability towards the creditor. The legal basis for the defense of prior claim is found in various provisions of the German Civil Code (BGB).
Legal classification of the defense of prior claim
Accession and subsidiary liability
The defense of prior claim is particularly relevant in security instruments where the debtor assumes liability for the obligation of another. The provision represents an expression of the principle of accession, which states that the liability of the guarantor, such as a guarantor, depends on the principal obligation and is, in principle, secondary or subsidiary.
Statutory regulations
Die statutory regulation of the defense of prior claim is found, for example, in the following provisions:
- § 771 BGB (Plea of prior claim in suretyship)
- § 497 BGB (Plea of prior claim in the assumption of debt)
- § 239 HGB (Liability of the general partner in a limited partnership)
In these cases, it is stipulated that a guarantor or co-debtor may require that the creditor first seeks satisfaction from the principal debtor or at least proves that a claim against the principal debtor was unsuccessful.
Requirements for the defense of prior claim
For the right to the defense of prior claim to exist, certain legal requirements must be met:
- Accessory obligation:
There must be an accessory obligation such as suretyship, co-debtorship, joint and several obligations, or a comparable security arrangement.
- Raising the defense:
The defense of prior claim does not automatically reduce liability but must be actively asserted by the guarantor against the creditor.
- No contractual or statutory grounds for exclusion:
The defense of prior claim must not have been excluded by contractual arrangement or by operation of law.
The defense of prior claim
Suretyship (§ 771 BGB)
In the case of suretyship the defense of prior claim is considered a constitutive feature. The guarantor may invoke § 771 BGB and require the creditor to first pursue compulsory enforcement against the principal debtor before holding the guarantor liable. However, the right to require prior claim may be contractually waived in certain cases, for example in the so-called “guarantor liable as principal debtor” (§ 773 para. 1 no. 1 BGB). In such a case, the guarantor assumes primary liability.
Beginning and end of the defense of prior claim
The creditor must first obtain an enforceable title against the principal debtor and demonstrate that enforcement attempts failed. If these are unsuccessful or hopeless, the defense lapses and the guarantor can be held liable. The defense of prior claim also lapses in statutorily regulated exceptional cases, such as:
- Cessation of payments or application for insolvency proceedings by the principal debtor,
- Principal debtor’s whereabouts unknown,
- Unsuccessful compulsory enforcement against principal debtor (§ 773 para. 1 nos. 2 and 3 BGB).
Assumption of debt and joint and several liability
Also in the case of assumption of debt (§ 497 BGB) and in certain forms of joint and several liability the defense of prior claim may play a role and protects the assuming debtor from direct enforcement by the creditor.
Aspects under company law
Im Commercial law and in various company forms, such as the limited partnership (KG), the personally liable partners are generally not entitled to the defense of prior claim. The limited partner, however, is fundamentally entitled to this defense unless otherwise agreed (§ 171 para. 1 HGB).
Legal consequences and effect of the defense of prior claim
Limitation of liability
Recourse to the accessory debtor is restricted until enforcement against the principal debtor has failed. Payments, enforcement actions, or other claims of the creditor against the guarantor or co-debtor are impermissible to that extent.
Loss of rights by waiver
If the defense of prior claim is not raised, the debtor is not protected against immediate recourse. The right may be excluded by separate contractual agreement.
Significance in insolvency law
The defense of prior claim gains particular importance in the event of the principal debtor’s insolvency. Upon the opening of insolvency proceedings, the right to require prior claim is generally lost and the creditor can proceed directly against the guarantor (§ 773 para. 1 no. 2 BGB).
Contractual exclusion and modification
Even when the security arrangement is established, the defense may be excluded by agreement between the guarantor and the creditor. The most common form is the acceptance of a guarantor’s liability as principal debtor. Such an exclusion is legally permitted but requires express declaration and clear regulation in the contract.
Practical and legal policy significance
The defense of prior claim is an important protective instrument for guarantors and significantly influences risk distribution in credit and security arrangements. Its purpose is to prevent accessory debtors from being burdened without a prior default of the principal debtor. In legal practice, its significance has considerably decreased, particularly due to the frequent use of the guarantor liable as principal debtor, where the right to require prior claim is regularly waived.
Overview of the main provisions relating to the defense of prior claim
- § 771 BGB: Plea of prior claim in suretyship
- § 497 BGB: Assumption of debt, defense of prior claim
- § 239 HGB: Liability of the general partner, limitation of the defense of prior claim
- § 171 HGB: Defense of prior claim of the limited partner
Summary
The defense of prior claim is an essential part of German debt and security law. It serves the protection of accessory debtors and ensures that recourse by the creditor is only permissible after enforcement efforts against the principal debtor have failed or appear hopeless. The defense must be expressly asserted and may be excluded in certain situations, in particular when a guarantor’s liability as principal debtor is agreed. In practical application, its significance is limited by the possibility of contractual exclusion, yet it remains of central doctrinal importance for the classification of accessory securities.
Frequently Asked Questions
What requirements must be met for a claim to assert the defense of prior claim?
A claim to assert the defense of prior claim, particularly under § 771 BGB (in guarantee law) or comparable regulations in German civil law, requires that a guarantor or joint and several debtor may refuse enforcement by the creditor as long as the creditor has not previously enforced against the principal debtor. This means the creditor must in principle first attempt to pursue claims against the principal debtor, for example by initiating enforcement proceedings, and only then may he have recourse to the guarantor or co-debtor. The defense of prior claim can, however, be excluded, for instance by express agreements in the guarantee contract (so-called “guarantor liable as principal debtor”) or when the principal debtor is manifestly insolvent, is in insolvency proceedings, or the creditor proves that enforcement measures against the principal debtor are hopeless. In each case, the contractual arrangements, as well as the current asset situation of the principal debtor, must be examined to determine whether the right to require prior claim exists.
What are the legal consequences of raising the defense of prior claim in guarantee proceedings?
If a guarantor raises the defense of prior claim in court, the court must first examine whether the creditor has already enforced against the principal debtor or whether such enforcement has failed. The procedure may therefore be significantly delayed, since the guarantor has an effective defense against immediate recourse. Only when the creditor proves that all reasonable enforcement options against the principal debtor have been exhausted or are futile from the outset does the defense lapse and the guarantor can be directly claimed. If the defense is valid, the claim against the guarantor will initially be dismissed. This provides an additional protection for the guarantor and at least temporarily relieves them from liability.
When is the defense of prior claim excluded?
The defense of prior claim is excluded if the guarantor has assumed liability as principal debtor and has expressly waived the right to require prior claim (§ 773 para. 1 no. 1 BGB). Furthermore, it lapses if the principal debtor is insolvent, enforcement against the principal debtor is hopeless, the principal debtor is abroad or of unknown whereabouts, or the guarantor has agreed to joint and several liability, as in certain types of joint obligations. Legal provisions or individual agreements may also expressly exclude the defense, if so agreed between the parties.
What are the burdens of presentation and proof on the guarantor when invoking the defense of prior claim?
When raising the defense of prior claim, the burden of presentation and proof initially lies with the guarantor. The guarantor must specifically and substantiatedly assert that the requirements for the defense of prior claim are met—especially that the principal debtor is still able to perform and that enforcement against them is possible and prospects of success. The creditor must then state and, if necessary, prove that sufficient attempts have already been made to enforce against the principal debtor, or that such attempts would in any case be futile, for instance due to insolvency or the principal debtor’s untraceability. The assessment is based on the facts presented in court.
Does the defense of prior claim also apply in cases of joint and several debtors (apart from guarantee law)?
Under classic German guarantee law, the defense of prior claim is mainly regulated in the relationship between guarantor, principal debtor, and creditor. Outside the context of guarantee, such as in the case of pure joint and several liability pursuant to §§ 421 et seq. BGB, such a defense generally does not exist. A joint debtor may not require the creditor to pursue another debtor first; the creditor may pursue any one or more of the joint debtors at his discretion. Only in exceptional cases, for example if expressly contractually agreed, could the situation be otherwise.
What rights and obligations arise for the creditor after a successful assertion of the defense of prior claim?
If the defense of prior claim is raised and is effective, the creditor is obliged to first exhaust all available and reasonable enforcement measures against the principal debtor. The creditor must demonstrably try to realize the claim by enforcement against the principal debtor. Only if these measures prove fruitless or clearly show no prospect of success may the creditor have recourse to the guarantor. The creditor is obliged, where necessary, especially in court proceedings or to third parties, to prove the futility of further measures. If enforcement fails, the obligations of the guarantor revive, and the creditor may then initiate legal action against the guarantor, who is then fully liable unless other defenses exist.
