11.5 Obligations of surety

The obligations of a surety in a contract of guarantee are legally binding commitments made by the surety to fulfill certain responsibilities and liabilities in the event that the principal debtor (the party whose obligations are guaranteed) fails to perform their contractual or legal obligations.

The liability of the surety is co-extensive with that of the principal debtor unless it is otherwise provided by the contract.

Explanation:

(i) The term “co-extensive with that of principal debtor” means that the surety is liable for what the principal debtor is liable.

(ii) The liability of a surety arises only on default by the principal debtor. But as soon as the principal debtor defaults, the liability of the surety begins and runs co-extensive with the liability of the principal debtor, in the sense that the surety will be liable for all those sums for which the principal debtor is liable.

(iii) Where a debtor cannot be held liable on account of any defect in the document, the liability of the surety also ceases.

(iv) Surety’s liability continues even if the principal debtor has not been sued or is omitted from being sued. In other words, a creditor may choose to proceed against a surety first, unless there is an agreement to the contrary.