Differences Between Contract of Guaranty and Contract of Surety

Contract of Surety: Surety is a contract that a third party undertakes to be personally liable to the debtor if the debtor fails to pay the debt. The guarantor is committed against the creditor to repay the debt of a third party (debtor). For this reason, a tripartite relationship emerges in the bail agreement. However, the principal borrower is not a party to the guarantee. As a rule, the guarantor must be a third party other than the creditor or debtor.

Contract of Guaranty: ‘The warranty contract is the contract in which the guarantor undertakes to take upon himself a certain economic risk that the guarantor is facing in such a way that he is independently liable’. As can be seen, although there appear to be two parties in the warranty agreement, ‘guaranteeing’ and ‘guaranteeing’, the warranty agreement is a one-party debt-loading agreement. The guarantor undertakes to guarantee the dangers it will face due to the movement style of the guarantor area or due to a debt relationship it will enter into. However, while the guarantor makes the commitment, the guarantee is completely independent of any other debt relationship in which the area is located. The ‘economic risk’ expressed in the definition is the negative outcome or harm that is doubtful whether it will occur in terms of the area of warranty. In order to mention the risk in the warranty contract, it is not necessary for the warranty area to be damaged. Although it has not suffered any damage, the risk may have been realized in terms of the guarantee area which did not reach the economic benefit it hoped for. The legal nature of the warranty agreement is discussed within the framework of the institution ‘undertaking the act of the third person’. The Supreme Court considers the warranty agreement to be a type of commitment to the third person's verb. This is the predominant view in teaching. But some authors suggest that, in stark contrast to the Supreme Court, commitment to the third person's verb is a type of warranty contract. A final opinion in the teaching states that the contract of guarantee cannot be considered the third person's verb within the framework of the undertaking, and that this contract is a peculiar(sui generis) contract.

  • The guarantor's debt is a subsidiary debt while the guarantor's debt is the principal debt. Therefore, in cases where the articles of association are null and void, the bail contract will also expire, while the guarantee contract will remain in force.
  • While the form requirements of the bail contract are stated in Tbk ( there is an existing and actual debt,it is done in a written form, the consent of the spouse is obtained), there is no form requirement of the guarantee contract.,
  • While the plea and objections to the principal debtor can be asserted against the guarantor creditor in the bail contract, the plea and objections to the principal debtor that guarantees in the guarantee contract cannot be asserted against the creditor.
  • The guarantor is the successor to the creditor as much as the amount paid from the original debt, but the law does not grant such a successor to the guarantor.

Supreme Court Decisions On The Issue: Supreme Court Decision No. 18.04.1995 Dated 1995/2878 Based On 1995/3954 Decision:

SUMMARY: In the interpretation of a convention, it is important to evaluate their real and common goals under objective rules of good faith, and to determine their true Will and desires, regardless of the words and names used by both parties to conceal their true purpose in the convention. In the event that the defendant bank guarantees the risk ( danger ) of the economically harmful actions of the contractor due to the actions of the contractor firm against the claimant by contract, this contract shall be signed in accordance with the code of obligations 110. it is a guarantee contract in the nature of "undertaking the verb of the third person" mentioned in the article. The warranty agreement is a non-fer contract. It takes on the dangers ( risks ) of the guaranteeing business in whole or in part with an independent commitment without fer. 110 Of The Code Of Obligations. the damage mentioned in the article is positive (positive ) damage and the occurrence of the damage is muaccel. Guarantee, the guarantor of the debt that gives the individual nature of the warranty, even though it is not in anyone's debt is independent of the individual. Therefore, liability arising from the bail contract continues as long as the debt relationship between the creditor and the third party is legally valid. When the principal debt is eliminated for any reason, the guarantor is relieved of the debt. In the warranty agreement, the obligation of the third party does not expire.

CONCLUSION: Impairment of the Local Court's decision for the benefit of the plaintiff on the grounds specified in paragraph one

In My Opinion: In practice, bail and guarantee contracts are often used interchangeably. In addition to the statements and expressions used by the parties regarding whether the contract is a guarantee agreement or a surety agreement, their will also needs to be examined. While warranty contracts are more often used in banking practices, the use of bail contracts is more common.


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Differences Between Contract of Guaranty and Contract of Surety