What is a guarantee (borgtocht) under Dutch law?

Dutch term: Borgtocht | Legal basis: Articles 7:850-7:870 BW

A guarantee (borgtocht) under articles 7:850 to 7:870 of the Dutch Civil Code is a contract by which a guarantor (borg) undertakes to perform the obligation of a principal debtor if the principal debtor fails to perform. The guarantee is accessory: it depends on the existence and validity of the underlying obligation.

Dutch law provides specific protective rules for private guarantors (natural persons not acting in the course of their profession or business), including a writing requirement and rules on the scope of the guarantee. For corporate guarantees (parent company guarantees, group guarantees), the regime is more flexible and the parties have greater contractual freedom.

Why it matters for international businesses

For international supply chain relationships, parent company guarantees are commonly used as credit security alongside retention of title and bank guarantees.