For most warranty agreements, the guarantee is linked as a guarantee and co-indebtedness. This means that the collateral obligations correspond to those of the principal debtor and that the guarantee is jointly liable to the creditor. A creditor can bring an action directly against the co-debtor without having to complain first by the principal debtor. A guarantee is that three parties are the creditors, the principal debtor and yourself as collateral. It is a contract between the creditor and the bonding company in his personal capacity, in which the guarantee undertakes to honour the obligations of the principal creditor if the principal debtor does not fulfill all or part of his obligations himself. In essence, the guarantor agrees to follow in the principal debtor`s footsteps if that debtor can no longer fill these shoes financially with respect to his creditor. Since people can stop at security even if they have bound themselves by separate instruments or at different times or do not know each other, it is important to always include applicable security clauses in your security. The Supreme Court of Appeal recently found that a person who has been required to sign a bonding contract by fraud or misrepresentation of a third party and who is not aware of the nature of the documents he has signed is nevertheless bound by the agreement if the lender (creditor) is innocent and unaware of the security error and that the bonding contract is therefore valid and enforceable. What happens if you sign a bond agreement without committing to a guarantee? Signing a guarantee for a debt means that one person represents another person`s debt. The classic case of the guarantee is when a member of a Close Corporation company or the director of a company signs the guarantee of the company`s debt. If the company does not pay its debts, the director/member who signed the guarantee is personally responsible for the company`s debt with respect to the guarantee.
(If there is no security, there is no personal responsibility). The guarantee agreement is therefore intended to limit the risk of losses to the lender, which can occur if the buyer is behind the contractual terms. The buyer is still responsible for his obligations under the loan agreement and the guarantee obligations are only incurred if the buyer does not meet his obligations. The situation of the obligor or the existence of another guarantee have not determined the guarantee of the conclusion of this agreement, which remains in force despite all the amendments. When a creditor claims the total debt or a proportional share of it, a co-guarantee may insist that the debt be divided among the guarantees, so that it is held responsible only for its proportionate share.