GUARANTY AND SURETYSHIP
(ARTICLES 2047 TO 2084)
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.
> 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
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
3. As to consideration
4. As to persons guaranteed
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
b. Indefinite or simple—one where the guaranty
includes not only the principal obligation but also
all its accessories
> 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