In short
In a suretyship, a surety promises a creditor to pay a debtor's obligation. A surety is primarily liable, so the creditor can demand payment from the surety without first pursuing the debtor.
Key takeaways
- A surety who pays has rights of reimbursement from the debtor, subrogation to the creditor's rights, and contribution from co-sureties.
- A surety can use most of the debtor's defenses, but not the debtor's incapacity or bankruptcy.
- A promise to answer for another's debt must generally be in writing.
Where it's tested
REG: Debtor-Creditor & Bankruptcy — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
A surety guarantees a loan to a principal debtor. Which defense of the principal debtor may the surety also use against the creditor?