A new professional payments guarantee law has been introduced in
Luxembourg to provide professionals with a tool that grants a wider
scope for contractual freedom while protecting the parties from a
re-qualification that may not be in line with their legitimate
expectations and their commercial agreements.
The professional payment guarantees law (the New
Law) came into force on 17 July 2020 and creates a new
type of guarantee in the Luxembourg legal system.
The professional payment guarantee (PPG) seeks
to alleviate shortcomings of existing personal security interests,
such as the first demand guarantee (garantie à
première demande) which may be subject to judicial
re-qualification (so that this instrument leads to legal
uncertainties) and the suretyship (cautionnement) which is
often considered as being too debtor-friendly and inflexible.
