Personal Securities – The Responsibility of Another Person

Personal securities are instruments that increase the chances of recovering receivables, especially when the contractor’s financial situation raises doubts. Their key feature is that in the event of non-payment by the debtor, the creditor can direct their claim to a third party – a guarantor, bank, or insurer – without the need for lengthy disputes with the debtor themselves.

Such securities not only increase transaction security but often act preventively – the presence of a guarantor or the requirement of a guarantee mobilizes the debtor to fulfill obligations on time. This solution is particularly useful in relations with a new client, for large amounts, or in situations where we have limited knowledge of the contractor’s financial standing. Importantly, personal securities can be relatively quick and flexible to implement – provided the proper form and content of the agreement are ensured.

1. Civil Guarantee (Articles 876–887 of the Civil Code) This is a classic security known from everyday transactions. The guarantor undertakes to pay the debt if the debtor fails to do so – and bears joint and several liability with all their assets. A guarantee requires written form under penalty of nullity, and the scope of liability can be modified – e.g., limited to only part of the obligation or set for a specific period.
2. Bank or Insurance Guarantee These solutions are popular in larger transactions, especially in construction contracts or international trade. A bank or insurance company issues a document in which it undertakes to pay a specific amount to the creditor – usually “on first demand.” Importantly: payment does not depend on whether the debtor acknowledges the debt – the guaranteeing institution settles with the creditor first, and only then possibly pursues claims against the debtor.
3. Blank Promissory Note A promissory note is seemingly an archaic document but still extremely effective. Issued “in blanco” – i.e., with a blank space for the amount – it can be filled in according to the promissory note declaration when the debtor fails to settle the debt. Based on it, the creditor can obtain a payment order in payment order proceedings – faster and cheaper than in ordinary proceedings.
4. Notarial Deed with Enforcement Clause (Article 777 §1 items 4–6 of the Code of Civil Procedure) This is one of the most effective legal tools available to an entrepreneur. The debtor can voluntarily submit to enforcement in the form of a notarial deed – e.g., up to a certain amount or payment deadline. After the court grants an enforcement clause, such a document becomes an enforcement title – meaning it can be taken directly to a bailiff, without the need for court proceedings. In such matters, we encourage you to seek assistance from RPMS Law Firm, which can be found at: https://rpms-legal.com.

Real Securities

Security over the debtor’s assets provides a real chance of recovering receivables – even if the company runs into problems. What options do we have in this regard?

• Registered pledge (Act of 6.12.1996) allows securing a claim on, for example, machines or cars, which can remain with the debtor. After entry in the register, we have priority in enforcement.
• Mortgage (Article 65 et seq. of the Act on Land and Mortgage Registers and Mortgage) protects the creditor on real estate – even if ownership changes. An agreement and entry in the land and mortgage register are required.
• Conditional transfer of ownership for security – the item temporarily transfers to the creditor and returns after the debt is repaid. Typical in leasing contracts or equipment supply agreements.
• Retention of title until payment (Article 589 of the Civil Code) – the goods formally still belong to the seller. If the client does not pay, they can be recovered.

Selecting Security – Reason Rather Than Automation

Not every security fits every transaction. The key is to match the form of protection to the scale of risk and the value of the contract.

If we are just starting cooperation with a new contractor – it is worth opting for something stronger: a guarantee, a promissory note, or even a notarial deed with an enforcement clause. If we have a regular partner who always pays on time – for example, a retention of title clause until payment (Article 589 of the Civil Code) may suffice.

Before signing a contract, it is also good to check the contractor – KRS (National Court Register), CEIDG (Central Register and Information on Economic Activity), BIG registers. This is a quick step that can protect against major problems. And during enforcement, any information about the debtor’s assets works in our favor.

It is also worth considering costs and time – a notarial deed works almost immediately and without a trial. A mortgage? It provides stability but requires more formalities. Therefore, a good choice of security is not just a legal matter – it’s a business decision.

Secure Yourself Before You Pay the Price

Securities will not make every contractor suddenly pay on time. But in case of problems, they provide something much more important – real tools for recovering receivables, often faster and cheaper than a traditional court process.

A well-chosen security acts like a seatbelt in business – it may not prevent a collision, but it will minimize the consequences. Therefore, it is better to act proactively than to seek help when the money is already lost.

If you want to be sure that the security will work when it is truly needed – it is worth consulting a professional. Experience in drafting contracts, analyzing risk, and selecting appropriate forms of protection often makes the difference between helplessness and effectiveness.