A personal guarantee in Cyprus makes you liable to the same extent as the debtor unless the contract says otherwise. But the Contract Law, Cap. 149, also discharges a guarantor more often than banks like to mention: when the terms are varied without your consent, when the debtor is given time or released, and when the creditor loses a security you were entitled to count on. A guarantee obtained by misrepresentation or by silence about something material is invalid from the start.
People sign guarantees at the worst possible moment for reading: at the end of someone else's loan, at the start of a child's tenancy, across the table from a supplier who will not open the account without one. Years later the letter arrives, addressed not to the debtor but to them. What the guarantor can and cannot be made to pay is governed by a dozen short sections of the Contract Law, Cap. 149, and they are unusually protective, if they are raised in time.
This guide is for the person being asked to sign, and for the person who signed years ago and has just received the demand.
The triangle the Law draws
Section 84 defines the arrangement: a contract of guarantee is a contract to perform the promise, or discharge the obligation, of a third person if that person defaults. The one who gives it is the surety, the person whose obligation is covered the principal debtor, the person protected the creditor. Everything below hangs on that triangle, because most of the guarantor's defences arise from things the other two corners did to each other without asking.
Under section 86, unless the contract provides otherwise, the surety is liable to the same extent as the principal debtor. The words "unless the contract provides otherwise" are the negotiation: a cap on the amount, an expiry date, a limitation to one facility rather than all borrowings, are all available to the person who asks before signing, and unavailable afterwards.
The guarantee that never ends, and how it does
Bank and supplier guarantees are usually drafted as continuing guarantees, which section 87 defines as guarantees extending to a series of transactions: not one loan, but the running account. Two sections then give the guarantor the exits. Under section 88, a continuing guarantee may be revoked at any time as to future transactions by notice to the creditor. And under section 89, unless the contract says otherwise, the surety's death itself operates as revocation for future transactions, which is a provision every family dealing with an estate should know exists.
Revocation reaches forward, not back: what is already owed on the day of the notice stays guaranteed. But for a guarantee over a running account, the notice stops the number growing, and it is a one-page letter.
What discharges a guarantor entirely
The sections that matter most in practice are the ones the creditor's file breaches.
Variation. Section 91: any variation of the terms between the principal debtor and the creditor, made without the surety's consent, discharges the surety as to transactions after the variation. The restructured facility, the increased limit, the new interest basis: if the guarantor did not consent, the guarantee does not follow the new deal.
Release and time. Sections 92 and 93: a contract releasing the debtor discharges the guarantor, and so does a contract by which the creditor compounds with the debtor, promises to give time, or promises not to sue, unless the guarantor assented. The boundary is drawn precisely: under section 94 an arrangement to give time made with a third person rather than the debtor does not discharge, and under section 95 mere forbearance, the creditor simply not suing for years, is not a discharge either, absent a contrary term.
The impaired remedy. Section 97: where the creditor does an act inconsistent with the guarantor's rights, or omits something the creditor's duty to the guarantor requires, and the guarantor's eventual remedy against the debtor is impaired, the guarantor is discharged. And section 99 gives the rule its sharpest edge: the guarantor is entitled to the benefit of every security the creditor held against the debtor when the guarantee was given, whether the guarantor knew of it or not, and if the creditor loses or parts with a security without the guarantor's consent, the guarantor is discharged to the extent of its value. The released mortgage, the returned deposit, the collateral quietly swapped: each is potentially a pound-for-pound reduction of the guarantee.
Invalid from the start. Sections 100 and 101: a guarantee obtained by a misrepresentation made by the creditor, or with the creditor's knowledge and assent, about a material part of the transaction is invalid; and so is a guarantee obtained by the creditor keeping silence as to a material circumstance. The account already deep in arrears at the moment the guarantee was signed, and nobody mentioned it, is the classic example the sections were written for.
If you pay: the guarantor's own rights
The guarantor who pays is not a donor. Under section 98, on paying or performing everything owed, the guarantor is subrogated to all the creditor's rights against the principal debtor: the claim, and with it the securities, pass to the person who actually paid. That is why the paying guarantor should collect the creditor's file, not just the receipt.
Where several people guaranteed the same debt, sections 104 and 105 settle the arithmetic between them: co-sureties, whether bound jointly or severally, under one contract or several, knowing of each other or not, contribute equally absent a contrary term, and co-sureties bound in different sums pay equally up to their respective limits. The co-guarantor who paid everything has a contribution claim against the others, and it is frequently the most valuable thing in the file.
Before you sign one
Three questions convert a dangerous document into a bounded one. What exactly is guaranteed: one facility, or everything the debtor may ever owe. What is the ceiling: a figure, or the debtor's liability whatever it becomes. And what ends it: a date, a condition, or only revocation for the future under section 88. A guarantee with a defined obligation, a cap and an end date is a known risk; an unlimited continuing guarantee of all obligations is a blank cheque with your name printed on it. The time to ask is before signature, when the creditor still wants something from you.
What to send us
The guarantee itself, every page including the schedules. Whatever you were told or shown when you signed, so far as you remember it, and by whom. The demand, if one has arrived, and any statement of account with it. And anything known about what the creditor and the debtor agreed after your signature: restructurings, new facilities, released securities. The defences live in that last category, which is why we ask for it first.
Questions we are asked
The bank restructured the loan without telling me. Am I still bound?
Possibly not, as to what came after. Under section 91 of Cap. 149, any variation of the terms between debtor and creditor made without the surety's consent discharges the surety for transactions subsequent to the variation. Send us the guarantee and whatever is known about the restructuring: the dates decide how much of the demand survives.
The creditor gave the debtor more time to pay. Does that affect me?
If the creditor contracted with the debtor to give time, or not to sue, or compounded the debt, section 93 discharges you unless you assented. Two neighbouring rules cut the other way: an arrangement with a third person rather than the debtor does not discharge you (section 94), and the creditor merely doing nothing for years is not a discharge either (section 95). Which side of those lines your facts fall is exactly what we check.
The bank released the mortgage it held from the debtor. Do I still owe everything?
Under section 99 you were entitled to the benefit of every security the creditor held when your guarantee was given, known to you or not, and if the creditor lost or parted with a security without your consent you are discharged to the extent of its value. A released or impaired security is not a detail: it is a defence measured in the security's worth.
Can I get out of a guarantee I signed years ago?
For the future, often yes: a continuing guarantee can be revoked as to future transactions at any time by notice to the creditor under section 88. What has already accrued stays. Whether the accrued part is also assailable depends on the sections above: variations, indulgences, lost securities, and what you were and were not told at signing under sections 100 and 101.
Nobody told me the account was already in arrears when I signed.
That is the situation sections 100 and 101 address: a guarantee obtained by the creditor's misrepresentation about a material part of the transaction, or by silence as to a material circumstance, is invalid. What was material, and what was concealed, is a question of evidence, so preserve everything from the time of signature and tell us the sequence while it is fresh.
I paid as guarantor. Can I recover from the debtor, or the other guarantors?
Both. On payment you step into the creditor's shoes against the debtor under section 98, securities included. And co-sureties contribute equally between themselves under sections 104 and 105, up to their respective limits where the sums differ. The claim is on contract, so the six year period under section 7(1) of Law 66(I)/2012 is the clock to watch.
Does the guarantor's death end the guarantee?
For future transactions under a continuing guarantee, yes, unless the contract says otherwise: section 89 makes death operate as a revocation for the future. What was owed at death remains a liability of the estate. An executor dealing with an estate that includes an old guarantee should establish the account balance at the date of death, because that is where the line is drawn.
Related reading
This work sits within our corporate and commercial practice, and the disputes end of it within litigation and debt recovery. The creditor's view of the same relationship is in debt recovery in Cyprus, what happens when the debtor company fails is in winding up a Cyprus company, and the personal side in personal insolvency.
This article is for general information only and does not constitute legal advice. Laws and their application can change, and individual circumstances differ. For advice on your own matter, contact Klitos Platis at klitos@kleanthousplatis.com or telephone +357 22 680 330.
Klitos Platis
Advocate, Partner
Kleanthous & Platis LLC, Nicosia · Published 22 August 2026
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