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suretyship:
(16c)
l. The legal relation that arises when one party assumes liability for a debt, default, or other failing of a second party. * The liability of both parties begins simultaneously. In other words, under a contract of suretyship, a surety becomes a party to the principal obligation. Cf. GUARANTY (1). [1]
1. A contractual relation, resulting from a primary, original, absolute, and unconditional engagement, whereby one person, the surety, engages to be answerable for the debt, default, or miscarriage of another, the principal. Madison County Farmers Asso. v American Employers’ Ins. Co. (CA8 Ark) 209 F2d 581, 42 ALR2d 1153; Welch v Walsh, 177 Mass 555, 59 NE 440.
While the contract of a surety is, in a sense, accessory or collateral to a valid principal obligation contracted by another person, either contemporaneously or previously, his obligation to the creditor or promisee of the principal is direct, primary, and absolute. 50 Am J1st Suret § 2.
It is the essence of the contract that there be a subsisting valid obligation of a principal debt. Without a principal there can be no surety. First Nat. Bank v Boxley, 129 Okla 159, 264 P 184, 64 ALR 588.
The vital difference between the contract of a surety and that of a guarantor is that a surety is charged as an original promisor, while the engagement of the guarantor is a collateral undertaking. A surety is a party to the principal obligation, undertaking together with the principal debtor that it shall be performed, while the guarantor is not a party to the principal obligation. 24 Am J1st Guar § 11. [2]
1. The contractual relationship between a surety, her principal, and a creditor. [3]
Excerpt from Herschel W. Arant, Handbook of the Law of Suretyship and Guaranty 14-15 (1931):
“[C]ourts and writers do not always use either term, surety or guarantor, in the same sense. Indeed, instances are not hard to find where inconsistent meanings have been attributed to these terms in a single opinion. It is fortunate, in view of this, that it is generally unnecessary to distinguish between suretyship and guaranty.” [4]
2. The lending of credit to aid a principal who does not have sufficient credit. * The purpose is to guard against loss if the principal debtor were to default.
3. The position or status of a surety.
Related Terms:
principal – the person for whose debt or default a surety is responsible under a contract of suretyship.
Various Forms of Suretyship:
involuntary suretyship – (1903) A suretyship that arises incidentally, when the chief object of the contract is to accomplish some other purpose.
personal suretyship: (1868) A suretyship in which the surety is answerable in damages.
real suretyship: (1846) A suretyship in which specified property can be taken, but the surety is not answerable in damages.
suretyship by operation of law: (1903) A suretyship that the law creates when a third party promises a debtor to assume and pay the debt t at the debtor owes to a creditor.
voluntary suretyship: (17c) A suretyship in which the chief object of the contract is to make one party a surety.
References:
Disclaimer: All material throughout this website is compiled in accordance with Fair Use.
[1]: Black’s Law Dictionary Deluxe Tenth Edition by Henry Campbell Black & Editor in Chief Bryan A. Garner. ISBN: 978-0-314-62130-6
[2]: Ballantine’s Law Dictionary with Pronunciations
Third Edition by James A. Ballantine (James Arthur 1871-1949). Edited by William S. Anderson. © 1969 by THE LAWYER’S CO-OPERATIVE PUBLISHING COMPANY. Library of Congress Catalog Card No. 68-30931
[3]: Ballantine’s Law Dictionary Legal Assistant Edition
by Jack Ballantine (James Arthur 1871-1949). Doctored by Jack G. Handler, J.D. © 1994 Delmar by Thomson Learning. ISBN 0-8273-4874-6.
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