Background
On December 20, 2021, Pousse Pousse, whose managing director was Mr. G., issued a promissory note payable to BNP Paribas on December 16, 2022. Mr. G.’s signature appeared both in the portion reserved for the note’s issuer and in the portion reserved for the guarantor, beneath the preprinted words “good for aval.”
After Pousse Pousse entered judicial liquidation, BNP Paribas filed its claim and sued Mr. G. for payment as the note’s aval guarantor. The Montpellier Court of Appeal rejected the bank’s claim, reasoning that Mr. G.’s signature alone did not establish a personal guarantee because he had added no handwritten statement confirming an intent to guarantee the company’s obligation and the bank had not shown that he understood himself to be personally bound.
The Court’s Holding
The Court of Cassation held that, under Articles L. 511-21 and L. 512-4 of the French Commercial Code, an aval on a promissory note, expressed by the words “good for aval” or an equivalent formula, arises from the guarantor’s signature alone when placed on the face of the instrument. No additional handwritten declaration or separate proof of the signer’s subjective intent is required.
Because the appellate court found that Mr. G. had signed the section reserved for the guarantor beneath the preprinted “good for aval” language, it violated those provisions by nevertheless refusing to recognize him as an aval guarantor. The Court partially quashed the judgment, leaving intact only the rejection of the request to invalidate the promissory note, and remanded the remaining issues to the Nîmes Court of Appeal. It also ordered Mr. G. to pay costs and €3,000 to BNP Paribas under Article 700 of the Code of Civil Procedure.
Key Takeaways
- A signature on the face of a promissory note beneath “good for aval,” or equivalent wording, is sufficient to create an aval guarantee.
- The guarantor need not add a handwritten statement separately confirming an intention to assume personal liability.
- A court may not disregard the statutory effect of the signature because the bank failed to prove that the signer understood the guarantee to be personal.
Why It Matters
The decision reinforces the formal operation of aval guarantees in French negotiable-instruments law. Corporate officers who sign the guarantor section of a promissory note bearing the prescribed language may incur personal liability even without adding their own written guarantee language.
For lenders, the ruling confirms that a properly placed signature under preprinted aval wording can establish the guarantee without additional evidence of the signer’s subjective understanding, although liability and other unresolved issues remain for determination on remand.