Facts
In January 1971, the company Indica Publicité S.A. (Indica) entrusted the fiduciary company Cofid S.A. (Cofid) with various administrative and management tasks. In March 1971, Cofid also lent 12,000 francs to Indica, repayable in 36 monthly instalments.
On 29 October 1971, Union Bank of Switzerland (UBS) established a surety contract guaranteeing Indica's obligations towards Cofid. This contract stipulated that the surety would be valid until 31 October 1972 and would automatically expire if the creditor (Cofid) did not assert its claims within 4 weeks following that date.
On 3 November 1972, Cofid informed UBS that it had initiated bankruptcy proceedings against Indica. However, the Cantonal Court of Valais rejected Cofid's claim for payment of 12,000 francs from UBS based on the surety.
Considerations
According to Art. 510(3) CO, the surety is released if the creditor does not legally pursue the enforcement of its rights within 4 weeks of the expiry of the surety and does not continue its proceedings without significant interruption. Jurisprudence considers that a creditor's inaction of more than 4 weeks generally constitutes a "significant interruption" within the meaning of this provision, unless there are special circumstances.
In this case, the Federal Tribunal found that Cofid remained completely inactive for more than 4 months regarding the overdue instalments of the loan, which constitutes a significant interruption. The other proceedings initiated by Cofid (bankruptcy…