EXTINGUISHMENT OF GUARANTY

 
Art. 2076. The obligation of the guarantor is extinguished at the  same  time  as  that  of  the  debtor,  and  for  the  same causes as all other obligations. (1847)
 

CAUSES OF EXTINGUISHMENT OF GUARANTY

1.   Being subsidiary and accessory, it is also terminated when the principal obligation is extinguished  
2.   It may itself be extinguished directly although the principal obligation subsists such as in the case of the release of the guarantor by the creditor  
 

MATERIAL ALTERATION OF PRINCIPAL CONTRACT

1.   Effect  of  material  alteration—any  agreement  between  the creditor  and  principal  debtor  which  essentially  varies  the terms  of the principal contract without the consent  of the surety will release the surety from liability
2.   When  alteration  is  material—the  guarantor  may  not  be released if the change doesn’t have the effect of making its obligation  more  onerous.    There  must  be  change  which imposes  new  obligation  or  added  burden  to  the  party promising  or  which  takes  away  some  obligation  already imposed, changing the legal effect of the original contract and not merely the form thereof.

Art.  2077.  If the creditor voluntarily accepts immovable or other  property  in  payment  of  the  debt,  even  if  he  should afterwards lose the same through eviction, the guarantor is released. (1849)
 

RELEASE BY CONVEYANCE OF PROPERTY

     Any substitute paid in lieu of money which is accepted by the    creditor    extinguishes    the    obligation    and    in consequence, the guaranty
 
Art. 2078. A release made by the creditor in favor of one of the guarantors, without the consent of the others, benefits all  to  the  extent  of  the  share  of  the  guarantor  to  whom  it has been granted. (1850) 

Art.  2079.  An  extension  granted  to  the  debtor  by  the creditor without the consent of the guarantor extinguishes the guaranty. The mere failure on the part of the creditor to demand payment after the debt has become due does not of itself  constitute  any  extension  of  time  referred  to  herein.
(1851a)
 

RELEASE  BY  EXTENSION  OF  TERM  GRANTED  BY  CREDITOR TO DEBTOR

1.   Where   the   release   without   consent   of   guarantor—guarantor is released from his undertaking
2.   Where   obligation   payable   in   installments—where   a guarantor   is   liable   for   several   payments,   such   as installments,  an  extension  of  time  as  to  one  or  more  will not affect the liability of the surety for the others.  But in case  of  an  acceleration  clause,  the  act  of  the  creditor  of extending payment of said installment without guarantor’s consent, discharges the guarantor because this constitutes an extension of the principal obligation.
3.   Prejudice   to   guarantor   and   period   of   extension   is immaterial
4.   Extension must be based on new agreement
5.   Diligence on the part of the creditor to enforce his claim
 
Art.  2080.  The  guarantors,  even  though  they  be  solidary, are released from their obligation whenever by some act of the  creditor  they  cannot  be  subrogated  to  the  rights, mortgages, and preference of the latter. (1852)
 
Art. 2081. The guarantor may set up against the creditor all the defenses, which pertain to the principal debtor and are inherent in the debt; but not those that are personal to the debtor. (1853)