Collateral guaranty

A contract by which the guarantor undertakes, in case the principal fails to do what he has promised or undertaken to do, to pay damages for such failure ; distinguished from an engagement of suretyship in this respect, that a surety undertakes to do the very thing which the principal has promised to do, in case the latter defaults. Woody v. Haworth, 24 Ind. App. 634, 57 N. E. 272 ; Nading v. McGregor, 121 Ind. 470, 23 N. E. 283. 6 L. R. A. 686.

Defined under Guaranty in Black's Law Dictionary.