Section 3 Suretyship Liability
Article 21
The scope of the suretyship guaranty includes the principal claim and the interest thereof, default fine, compensation for damage and expenses for enforcing the claim, unless the suretyship contract provides otherwise. In the absence of an agreed or explicitly¹ agreed scope of the suretyship guaranty, the surety shall be liable for payment of all the above costs.

 

Article 22
If a creditor² transfers, in accordance with law, his principal claim to a third party during the period of the suretyship, the surety shall continue to be bound by the suretyship contract within the scope of the original suretyship guaranty, unless the suretyship contract provides otherwise.

Article 23
Where a creditor permits a debtor³ to transfer his debts to a third party during the period of the suretyship, a consent in writing shall need to be obtained from the surety; the surety shall no longer be liable if the debts are transferred without his prior consent in writing.

Article 24
When a creditor and a debtor agree to alter the principal contract, they shall have to obtain the surety's consent in writing; the surety shall no longer be liable if the contract is altered without his prior consent in writing, unless the suretyship contract provides otherwise.

Article 25
If the surety of a general suretyship and the creditor have no agreement on the term of suretyship, the term of suretyship shall be six months from the date of maturity⁴ of the principal debts. Where the creditor neither files a lawsuit⁵ against the debtor nor applies for arbitration⁶ during the term of suretyship agreed in the contract or provided in the preceding paragraph, the surety shall be relieved of the suretyship liability; where the creditor has filed a lawsuit or applied⁷ for arbitration, the provisions on the interruption of prescription⁸ shall apply to the term of suretyship.

Article 26
Where the surety of a suretyship of joint⁹ and several liability and the creditor have no agreement on the term of suretyship, the creditor shall, within six months from the date of maturity of the principal debts, have the right to demand that the surety undertake suretyship liability. If the creditor does not demand that the surety undertake suretyship liability during the term of suretyship agreed in the contract or provided by the preceding paragraph, the surety shall be relieved of the suretyship liability.

Article 27
Where in accordance with the provisions of Article 14 of this Law, a surety provides a suretyship to a creditor's claims which successively occur but there is no agreement on the term of the suretyship, the surety may at any time notify in writing the creditor of termination of the suretyship contract, nevertheless, the surety shall be liable for the creditor's claims which vested before the creditor receives the notice.

Article 28
Where there are both suretyship and property security for the same claim, the surety shall be liable for the creditor's claim unsecured by the property security. If the creditor waives¹⁰ the property security, the surety shall be relieved of his suretyship liability to the extent of the creditor's waiver.

Article 29
If a branch of an enterprise as a legal person concludes a suretyship contract with a creditor without the written authorization¹¹ of the enterprise or beyond the scope of the authorization, the suretyship contract shall be null and void or the part of the contract that is beyond the scope of the authorization shall be null and void . If the creditor and the enterprise as a legal person are both at fault, they shall bear their respective civil liabilities commensurate with their own fault; if the creditor is not at fault, the enterprise as a legal person shall be civilly liable.

Article 30
The surety shall not be civilly liable under any of the following circumstances: (1) the parties to the principal contract conspire¹² to defraud¹³ the surety of a suretyship; and (2) the creditor to the principal contract resorts to deception¹⁴ or coercion¹⁵ to induce or cause the surety to provide a suretyship against its will.

Article 31
The surety, after his assumption of the suretyship liability, shall be entitled to recourse against the debtor.

Article 32
If the creditor does not seek to enforce his claim after a People's Court's acceptance of the debtor's bankruptcy¹⁶ case, the surety may participate in the distribution of the bankruptcy property and exercise his right of recourse in advance.
Chapter 3 Mortgage

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