What is the difference between a contract of suretyship and a contract of guarantee?
Understand the Problem
The question is asking about the difference or characteristics of a contract of suretyship and a contract of guarantee. It seeks to understand the legal definitions, implications, and possibly the practical applications of both types of contracts.
Answer
Suretyship is an accessory obligation; guarantee is an independent obligation.
A contract of suretyship is an accessory contract where a surety agrees to be liable for another's debt if they default. A contract of guarantee, typically independent, involves a third party ensuring the principal fulfills their obligations.
Answer for screen readers
A contract of suretyship is an accessory contract where a surety agrees to be liable for another's debt if they default. A contract of guarantee, typically independent, involves a third party ensuring the principal fulfills their obligations.
More Information
Suretyship involves the surety's obligation which is directly tied to the underlying obligation, meaning the surety cannot be called upon unless the principal debtor defaults. A guarantee is usually a separate and independent promise from the main contract obligation.
Tips
Confusing guarantee with suretyship as both provide security, but their legal implications and structures differ significantly.
Sources
- What is the difference between a surety and guarantee or is it the ... - wylie.co.za
- Suretyship vs Guarantee. What's the difference? - PH Attorneys - phinc.co.za
- Differences Between Contract of Guaranty and Contract of Surety - kucukislamoglu.av.tr
AI-generated content may contain errors. Please verify critical information
