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As a verb, to agree to be responsible for the payment of another's debt or the performance of another's duty, liability, or obligation if that person does not perform as he or she is legally obligated to do; to assume the responsibility of a guarantor; to warrant.
As a noun, an undertaking or promise that is collateral to the primary or principal obligation and that binds the guarantor to performance in the event of nonperformance by the principal obligor.
A guaranty is a contract that some particular thing shall be done exactly as it is agreed to be done, whether it is to be done by one person or another, and whether there be a prior or principal contractor or not.
v. and n. an older spelling of guarantee, which the renowned Oxford etymologist Dr. Walter Skeat called a "better spelling" (1882).
guarantya person who acts as a guarantor under a GUARANTEE.
GUARANTY, contracts. A promise made upon a good consideration, to answer for
the payment of some debt, or the performance of some duty, in case of the
failure of another person, who is, in the first instance, liable to such
payment or performance. 1 Miles' Rep. 277.
2. The English statute of frauds, 29 Car. II. c. 3, which, with modification, has been adopted in most of the states; 3 Kent's Com. 86 requires, that "upon any special promise to answer for the debt, default, or miscarriage of another person, the agreement, Or some memorandum, or note thereof, must be in writing, and signed by the party to be charged therewith, or some other thereunto by him lawfully authorized." This clause of the statute is not in force in Pennsylvania. To render this statute valid, under the statute, its form must be in writing; it must be made upon a sufficient consideration; and it must be to fulfill the engagement of another.
3. - 1. The agreement must be in writing, and signed by the party to be bound, or some one authorized by him. It should substantially contain the names of the party promising, and of the person on whose behalf the promise is made; the promise itself, and the consideration for it.
4. - 2. The word agreement in the statute includes the consideration for the promise, as well as the promise itself; if, therefore, the guaranty be for a subsisting, debt, or engagement of another person, not only the engagement, but the consideration for it, must appear in the writing. 5 East, R. 10. This has been the construction which has been given in England, and which has been followed in New York and South Carolina, though it has been rejected in several other states. 3 John. R. 210; 8 John. R. 29; 2 Nott & McCord, 372, note; 4 Greenl. R. 180, 387; 6 Conn..R. 81; 17 Mass. R. 122. The decisions have all turned upon the force of the word agreement; and where by statute the word promise has been introduced, by requiring the promise or agreement to be in writing, as in Virginia, the construction has not been so strict. 5 Cranch's R. 151, 2.
5. - 3. The guaranty must be to answer for the debt or default of another. The term debt implies, that the liability of the principal debtor had been previously incurred; but a default may arise upon an executory contract, and a promise to pay for goods to be furnished to another, is a collateral promise to pay on the other's default, provided the credit was given, in the first instance, solely to the other. It is a general rule, that when a promise is made by a third person, previous to the sale of goods, or other credit given, or other liability incurred, it conies within the statute, when it is conditional upon the default of another, who is solely liable in the first instance, otherwise not; the only inquiry to ascertain this, is, to whom was it agreed, that the vendor or creditor should look in. the first instance ? Many nice distinctions have been made on this subject. 1st. When a party actually purchases goods himself, which are to be delivered to a third person, for, his sole use, and the latter was not to be responsible, this is not a case of guaranty, because the person to whom the goods were furnished, never was liable. 8 T. R. 80. 2d. Where a person buys goods, or incurs any other liability, jointly with another, but for the use of that other, and this fact is known to the creditor, the guaranty must be in writing. 8 John. R. 89. 3d. A person may make himself liable, in the third place, by adding his credit to that of another, but conditionally only, in case of the other's default. This species of promise comes immediately within the meaning of the statute, and in the cases is sometimes termed a collateral promise.
6. Guaranties are either special or for a particular transaction, or they are continuing guaranties; that is, they are to be valid for other transactions, though not particularly mentioned. 2 How. U. S. 426; 1 Metc. 24; 7 Pet. 113; 12 East, 227; 6 M. & W. 612; 6 Sc. N. S. 549; 2 Campb. 413; 3 Campb. 220,; 3 M. & P. 573; S, C. 6 Bing. 244 2 M. & Sc. 768; S. C. 9 Bing. 618 3 B. & Ald. 593; 1 C. & M. 48; S. C. 1 Tyr. 164.
Vide, generally, Fell on Mercantile Guaranties; Bouv. Inst. Index, h. t.; 3 Kent's Com. 86; @Theob. P. & S. c. 2 & 3; Smith on Mer. Law, c. 10; 3 Saund. 414, n., 5; Wheat. Dig. 182 14 Wend. 231. The following authorities refer to cases of special guaranties of notes. 6 Conn. 81; 20 John. 367; 1 Mason 368; 8 Pick. 423; 2 Dev. & Bat. 470; 14 Wend. 231. Of absolute guaranties. 2 Har. & J. 186; 3 Fairf. 193 1 Mason, 323; 12 Pick. 123. Conditional guaranties. 12 Conn. 438. To promises to guaranty. 8 Greenl. 234; 16 John. 67.