Defences of Greek Law that were pleaded with respect to the Personal Guarantee on the Loan

Amount.

1. Article 862 - Greek Civil Code -

A guarantor shall be exonerated from his obligations whereby by the reason of the fault of the

creditor, his satisfaction from the debtor became impossible.

The defence requires a casual connection between the creditors fault and the impossibility talked

about above. The above concept of fault as laid down by the Article 862 of the Greek Civil Code

covers all types of fault under the Greek Law.

The Lender in the present case sold off the vessels in question and it has been alleged that the

amount still owed by the sale of the vessels is due to the negligent selling of the vessels by the

Bank when the vessel market itself was at an all time low. The court in its judgment has

expressively said that the claimants have nowhere violated Article 862 of the Greek Civil Code

as the sale of the vessel has to be done by the claimant because of the increasing defaults and the

deteriorating conditions of the vessels themselves. The court made it clear that it did not consider

that any of those provisions requires a lender to delay enforcement in the speculative hope that

the market will improve. On the contrary, a lender is likely to be at fault if it does delay

enforcement in the hope of market recovery, especially when the mortgaged or pledged property

is continuing to incur expenses and/or may deteriorate in value.

In the expert opinion sought by the court with respect to Article 862 it was also laid down that

the lender after the termination of the loan agreement, if under the contract has the right to sell

the pledged or mortgaged assets of the borrower, then the lender should do it. This is precisely

what the claimants have done in the opinion of the court.

2. Article 281- Abuse of Right

Exercise of a right shall be prohibited if such an exercise exceeds the limits imposed by good

faith or morality or by the social or the economic purpose of the right itself.

Any behavioural inconsistency with the following will lead to the abuse of a right under Article

281-

a. Good Faith - Each party to transaction in exercise of a right has to take into consideration the

justified expectations and interests of the counterparty.

b. the bone mores - prevailing and generally accepted morality.

c. Social and economic purpose of the right.

On expert advice the court also took into consideration the fact that long term inaction of the

beneficiary of a right can be in breach of Article 281.This implies that the beneficiary has given

the wrong belief to the other party that he will not exercise his right.

This defence was also pleaded by the defendants where it was stated by them that the claimants

had an understanding with the personal guarantor that they wont exercise their rights against her.

However, this contention of the defendants was rejected by the Court as there was no evidence of

any such understanding or agreement and that there was no delay in the exercise of the rights by

the claimants and the same in no way is opposed to good faith and the things mentioned above.

P.S. - i am very sorry i did not understand the third defence.