Guaranty \Guar"an*ty\, n.; pl. Guaranies. [OF. guarantie,
garantie, F. garantie, OF. guarantir, garantir, to warrant,
to guaranty, E. garantir, fr. OF. guarant, garant, a
warranter, F. garant; of German origin, and from the same
word as warranty. See Warrant, and cf. Warranty,
Guarantee.]
In law and common usage: An undertaking to answer for the
payment of some debt, or the performance of some contract or
duty, of another, in case of the failure of such other to pay
or perform; a guarantee; a warranty; a security.
[1913 Webster]
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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.
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