Personal security forms:

  • promissory note or bill of exchange,
  • voluntary submission to execution resulting from a notarial deed,
  • assignment of receivables,
  • guarantees,
  • surety.

Material security forms:

  • mortgage,
  • pledge, including registered pledge,
  • transfer of title to secure payment,
  • retention of title.

Our counterparty directly can provide security by issuing a promissory note or a bill of exchange, by voluntary submission to execution, assignment of receivables or by the above mentioned material security forms.
Securities made by external entities include bank and insurance guarantees and sureties.

Promissory note or bill of exchange

There are two basic types of such securities. A promissory note is a security containing an unconditional promise that a drawer will pay a specified amount of money in a designated place and time to a remitter. A bill of exchange is a security in which a drawer directs to a third person, so called drawee, a payment order to the benefit of a remitter.

Additionally, the law allows blank promissory notes. A security without a written amount of transaction or its payment date secures interests of a loan creditor. Its advantage is that contrary to a deposit it does not freeze any cash. It is in the interest of a drawer to draft a promissory note declaration in which parties jointly agree upon which conditions a debtor may be ordered to pay and what is a maximum amount which may be placed on a note.

Voluntary submission to execution

In this case our counterparty undertakes in the form of a notarial deed to pay a specified amount of money and at the same time indicates a deadline by which we can apply for so called writ of execution. Although we apply for it to the court, we skip however a whole long procedure of pursuing a claim. We will wait but much shorter than in case of regular proceedings.

Assignment of receivables

Assignment of receivables is a quite common form of security. It is an agreement between a creditor and a third person based on which a current creditor assigns receivables to a counterparty. A transfer can include any receivable as long as it is not contrary to the legislation, agreement of parties and nature of obligation.


A bank or insurance guarantee of payment is a quick form to get receivables when our counterparty does not want to pay. It’s good to ensure that a guarantee is issued by a reputable and reliable bank or insurance company and has the following attributes – is unconditional, irrevocable and payable on first demand. Naturally, bank and insurance guarantee involves issuing costs.


A surety is a person who based on an agreement undertakes to perform an obligation towards a creditor if a debtor fails to do it. Of course, a pool of people who can be a surety is very wide. It can be both a natural and a legal person – as long as he is duly represented.


A mortgage is a limited property right on a real property. In order to establish it, it is necessary to make an entry in a land and mortgage register. Mortgage entry gives a right to satisfy a claim from a real property regardless of the fact who will become an owner of it and with a priority before personal creditors of the property owner.


A pledge is, in some extent, an equivalent of a mortgage but established on movable property. Here, similarly to a mortgage, having a pledge right gives a possibility to satisfy claims from movable property regardless of the fact who will become an owner of it, before personal creditors of the property owner. In order to establish a pledge, it is necessary to sign an agreement between an owner of movable property and a creditor and, in principle, to release the property to a creditor or a third person, to which parties have agreed. A necessity to release the property will not take place in case of establishing a registered pledge and entering a subject of the security to a pledge register. In such a case, a subject of the pledge will remain in the owners’ hands and the entry will tell about the established security.

Transfer of title to secure payment

A transfer of title to secure payment is similar to a pledge. When this security is applied, contrary to a pledge, a person exercising it becomes an owner of the property although the property is still used by a debtorl. In case when a counterparty fails to pay a debt, a creditor has a possibility to satisfy the claim from this property. In a legal sense the property will return to a previous owner when he or she settles the obligation. Details of this security form are regulated by a simple agreement.

Retention of title

Retention of title to sold goods is a specific form to secure payment. This form of security can be used by persons who sell movable property. It means that, although we deliver our goods to a counterparty, the goods shall remain our property until the full payment for them is made. If the goods are released to a purchaser, he can use them but shall be aware that the goods do not belong to him until he pays for them.

Retention of title is used in case of deferred payments. It may also be reserved in a situation when the price is to be paid in installments. In case the payment is not made on time, a seller may pursue his claims on general terms or may use the right to withdraw from an agreement and demand a return of his property.