Duhaime's Law Dictionary


Surety Definition:

A person who promises to answer for the debt or performance of another.

Related Terms: Surety Bond, Performance Bond, Indemnity, Guarantor, Guarantee or Guaranty, Bond

The person who has pledged him or herself to pay back money or perform a certain action if the principal to a contract fails, as collateral, and as part of the original contract.

A person who binds himself to honour another's obligations in the event of that other's default.

In A Dictionary of English Law by (London: Sweet and Maxwell, 1923) page, 856, author W. Y. Byrne gives this illustration:

"If A owes B money and C, for good consideration, promises B that he will pay him the money if A does not, here C is a surety for A, the principal debtor, and his promise constitutes a contract of suretyship."

Also known as a performance bond.

[surety image - siamese twins]In  Commercial Money Center v. Illinois Union Insurance, Justice Ralph Guy of the United States Court of Appeals adopted these words in regards to the difference between a surety contract and a contract of insurance:

"Suretyship is described as involving a tripartite relationship consisting of a principal obligee who is owed a debt or duty; a principal obligor who is responsible for payment of the debt or performance of the duty; and a secondary obligor or surety who agrees to answer for the primary obligor's debt or duty....

"An insurer undertakes to indemnify another against loss, damage, or liability arising from an unknown or contingent event, whereas a surety promises to answer for the debt, default, or miscarriage of another.

"The surety relationship is a tripartite one; it is a third party (the obligee), not the principal, who is protected, although the principal pays the premium. Furthermore, an insurer has no right of subrogation against its insured; a surety, on the other hand, is entitled to reimbursement by its principal."

In law, where a person provides collateral after or before the original contract is signed, and as a separate contract, the person is called a guarantor and not a surety.

In criminal law, the concept of a surety was fully explained in an Alberta Court of Queen's Bench case, R v Webster:

"A surety is the person who puts up money to ensure both the accused's attendance in court when required and the accused's good behaviour pending an appearance in court.

"Even when an accused does not show up in court when required, a surety may, in certain circumstances, obtain the return of the money or property put up to ensure attendance.

".... (I)n Ex parte Green by Lord Denning ... began by stating that, at common law, if the terms of the undertaking of the surety were not fulfilled, the surety was automatically forfeited. He went on to say that this position had been softened by the granting of judicial discretion in the matter of the return of bail....

"Lord Denning then outlined the role of the judge who must decide whether to return any part of a surety's money or property: 'By what principles are the justices to be guided? They ought, I think, to consider to what extent the surety was at fault. If he or she connived at the disappearance of the accused man, or aided it or abetted it, it would be proper to forfeit the whole of the sum. If he or she was wanting in due diligence to secure his appearance, it might be proper to forfeit the whole or a substantial part of it, depending on the degree of fault. If he or she was guilty of no want of diligence and used every effort to secure the appearance of the accused man, it might be proper to remit it entirely.'"

In the 1862 English case of Blest v. Brown, Justice Westbury wrote:

"It must always be recollected in what manner a surety is bound. You bind him to the letter of his engagement. Beyond the proper interpretation of that engagement you have no hold upon him. He receives no benefit and no consideration. He is bound therefore merely according to the proper meaning and effect of the written engagement that he has entered into. If that written engagement is altered in a single line, no matter whether it be altered for his benefit, no matter whether the alteration be innocently made, he has a right to say: The contract is no longer that for which I engaged to be surety: you have put an end to the contract that I guaranteed, and my obligation therefore is at an end."

In Mayo v Hutchinson, Justice Appleton wrote:

"Almost all who sign as surety have occasion to remember the proverb of Solomon: 'He that is surety for a stranger shall smart for it, and he that has suretyship is sure'.

"But they are nevertheless held liable upon their contracts, otherwise there would be no smarting and the proverb would fail."

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