NATURE AND EXTENT OF GUARANTY

Article 2047.  By guaranty, a person, called the guarantor, binds  himself  to  the  creditor  to  fulfill  the  obligation  of  the principal debtor in case the latter should fail to do so.
 
If  a  person  binds  himself  solidarily  with  the  principal debtor, the provisions of Section 4, Chapter 3, Title I of this Book shall be observed.  In such case, the contract is called a suretyship.

GUARANTY

>  Contract between the guarantor and creditor
> In a broad sense, it includes pledge and mortgage because the purpose of guaranty may be accomplished not only by securing the fulfillment  of  an obligation contracted  by the principal  debtor  through  the  personal  guaranty  of  a  third person  but  also  by  furnishing  to  the  creditor  for  his
security,  property  with  authority  to  collect  the  debt  from the proceeds of the same in case of default.
 

CHARACTERISTICS OF A GUARANTY

1.   Accessory—because it is dependent for its  existence upon the principal obligation guaranteed by it
2.   Subsidiary  and  conditional—it  takes  effect  only  when  the principal debtor fails in his obligation subject to limitation
3.   Unilateral—
a.    Gives  rise  only  to  the  duty  on  the  part  of  the guarantor  in  relation  to  the  creditor  and  not  vice versa
b.   It   may   be   entered   into   even   without   the intervention of the principal debtor
4.   Contract,  which  requires  that  the  guarantor  be  a  distinct person from the principal debtor because a person cannot be the personal guarantor of himself
 

CLASSIFICATION OF GUARANTY

1.   Guaranty in the broad sense—
a.    Personal—guaranty  properly  so-called  or  guaranty in  the  strict  sense.    The  guarantee  given  is  the credit  given  by  the  person  who  guarantees  the fulfillment of the principal obligation.
b.   Real—the   guaranty   is   property,   movable   or immovable

2.   As to its origin
a.    Conventional
b.   Legal
c.    Judicial 

3.   As to consideration
a.    Gratuitous
b.   Onerous

4.   As to persons guaranteed
a.    Single
b.   Double or sub-guaranty—one constituted to secure the fulfillment of a guarantee in another guaranty

5.   As to its scope and extent
a.    Definite—one where the guaranty is limited to the principal  obligation  only,  or  to  a  specific  portion
thereof
b.   Indefinite   or   simple—one   where   the   guaranty
includes  not  only  the  principal  obligation  but  also
all its accessories
 

SURETYSHIP

> A relation  which exists  where  one person  has  undertaken an obligation and another person is also under a direct and primary obligation or other duty to a third person, who is entitled to but one  performance,  and as between the two who  are  bound,  the  one  rather  than  the  other  should perform
> Contractual relation resulting from an agreement whereby one  person,  the  surety,  engages  to  be  answerable  for  a debt,   default,   miscarriage   of   another   known   as   the principal
 

LAW APPLICABLE TO SURETYSHIP

>  Second paragraph
>  It    covers    OBLIGATIONS,    DIFFERENT    KINDS    OF OBLIGATIONS,   JOINT   AND   SOLIDARY   OBLIGATIONS, OBLIGATIONS AND CONTRACTS
>  If  a  person  binds  himself  solidarily  with  the  principal debtor, the contract is called suretyship and the guarantor is called the SURETY