True or false

1. Excussion is a pre-requisite to secure judgment against a guarantor - False

2. Since a surety is an onerous transaction, it is strictly construed against the
creditor TRUE

Yes or NO
3. May a guarantor demand that the assets of principal debtor shall been exhausted
first, before he may be held liable? YES
4. May benefit of excussion be waived? YES
5. Is surety a more onerous transaction compared to guaranty? YES
6. Should the creditor notify or obtain the consent of the surety to any
material alteration in the principal loan?
Yes.
The fundamental rules of fair play require the creditor to obtain the consent of the surety
to any material alteration in the principal loan agreement.

7.

If the creditor did not notify or obtain the consent of the surety to a material alteration in the
contract, the surety may not be held liable for those obligations, which are not part of the original
contract.

8. The right of the surety to be informed to any material alteration in the

contract, after the same has already been contracted, may be waived
by him
9. The reason for the rule that the surety must be notified to any material
alteration in the contract may be found on the basic rules of fair play.
10.
The surety, who has not been notified as to the material
alterations in the contract, is not bound to the subsequent obligations
by reason of such change.
11.

Is a continuing surety allowed?

Yes.
A continuing surety is allowed. This does not mean however, that the
creditor may extend the scope of the principal obligation inordinately.

In other words, all future debts must be contemplated or described in

the original contract.
If the continuing guaranty limits the amount of debt to a specific value,
it should not exceed that.
The extent of guarantee must not exceed what was described or
contemplated in the original contract of guaranty, agreed to by the
guarantor.
If there is an expiry date, no debt must be incurred after the expiry
date.
If there is a limit as to the amount that is secured by the continuing
guaranty, anything in excess of that cannot bind the guarantor.

If the surety or guarantor did not specify a limit as to the amount or a

period, which he binds himself to be liable, then no limit and no period
is contemplated. The court cannot add something that is not present in
the agreement.

If the guarantor assumes obligation unqualifiedly, then what he agreed

to has the force of law as to him. He is liable to the extent of what he
has contracted himself to undertake.
The rule is that when a person binds himself to be jointly and severally
liable with the principal debtor, he is deemed to be a surety.
A guarantor is a person who undertakes to pay in case the obligor fails
to do so.
A surety also guarantees to pay upon default of the obligor.
If the contract is clear, explicit and equivocal, it shall be applied.
A surety joins in the principal debtors obligation. He is a regular party
to the undertaking. He is directly and primarily responsible with him,
regardless of the solvency of the principal debtor.

In surety, there is only one contract. He is bound in the same

instrument that binds the principal