Guaranty

Group 3
(NAMES)

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. Accessorybecause it is dependent for its existence
upon the principal obligation guaranteed by it
2. Subsidiary and conditionalit takes effect only
when the principal debtor fails in his obligation subject
to limitation

Characteristics of a Guaranty
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.