SECURITIES

A security is a form of right, the purpose of which is to secure payment for a particular performance by one party (the debtor) in respect of another party (the creditor). The performance may consist of a range of (legal) actions. The best-known performance for which security is stood is the payment of a debt. The 'obligation to do' or ' not to do' something can also be a performance for which security can be demanded by the creditor. It is in the interest of creditors to obtain legal advice before acquiring a security, and in respect of the form of security.

COMMERCIAL SECURITY RIGHTS

Commercial security rights are for example rights of pledge and mortgage that are established on registered properties and the related movable goods. If the debtor fails to fulfil his obligations, these rights entitle the creditor to sell the related goods in public (or have them sold). He is entitled to preferential collection of his claims against the revenue from those goods and items.

PERSONAL SECURITY RIGHTS

Personal security rights are for example the bond, the guarantee and joint and several liability. On the basis of these rights, a 'third party' takes on shared liability for the debt. The bond and the guarantee can provide security for the entire debt or up to a maximum agreed amount. In the case of joint and several liability, the 'third party' is liable for the entire debt. The creditor can call in the surety or guarantee up to the amount for which the bond or guarantee was issued, or may hold the 'third party' who has made himself jointly and severally liable, for payment of the entire debt.