Unlimited Suretyships

Abstract

The contract of suretyship is accessory to the transaction that creates the obligation of the principal debtor. The surety’s undertaking may be for a limited or an unlimited amount. Although the nature and the amount of the principal debt must be recorded in the deed of suretyship, it has been said that the actual amount of the principal debt need not be stated where the surety undertakes unlimited liability which may or may not include liability for a future debt. The duration of the surety’s liability depends upon the terms of the deed of suretyship. In the case of a single credit transaction, the surety’s liability extends only to one credit or transaction agreed upon. Some suretyships are framed to apply to many different transactions which need not be identified separately. These suretyships are called “continuing suretyships or guarantees.” In the case of a continuing suretyship, the surety’s liability extends to a series of credits and transactions. These transactions or credits may relate to some future debt to be incurred or to an existing debt already incurred by the principal debtor.

Keywords: suretyship