Guaranty

An undertaking to answer for another's liability, and collateral thereto. A collateral undertaking to pay the debt of another in case he does not pay it.

Shaw, C. J., 24 Pick. (Mass.) 252. 194 111. App. 514.

It is distinguished from suretyship in being a secondary, while that is a primary, obligation; or, as sometimes defined, guaranty is an undertaking that the debtor shall pay; suretyship, that the debt shall be paid. The undertaking is essentially in the alternative. A guarantor cannot be sued as a promisor, as the surety may; his contract must be specially set forth. A guarantor warrants the solvency of the promisor, which an indorser does not.

8 Pick. (Mass.) 423.

Guaranty, as distinguished from "suretyship," is an independent contract, while the surety is bound jointly with his principal. "A contract of suretyship is a direct liability for the act to be performed by the debtor, and a guaranty is a liability only for his ability to perform the act."

52 Pa. St. 440.

As distinguished from "indemnity," in that a principal obligation is essential to guaranty, while indemnity may be a primary contract. Guaranties are either: (1) General, running to any person dealing with the principal. (2) Special, to a particular person. (3) Limited, i. e., covering only a particular transaction. (4) Continuing, applicable to a class of future transactions. (5) Absolute, conditioned only on the default of the principal. (6) Conditional, dependent on some extraneous condition.