Title 18 — Business Structure and Function

Where one, at the request of another, engages to answer in damages, whether liquidated or unliquidated, for any violation of duty on the part of the latter, he is entitled to be reimbursed in the same manner as a surety, for whatever he may pay. SOURCE: CC § 2779.

Upon those contracts of indemnity which are taken in legal proceedings as the security for performance of an obligation imposed or declared by the tribunals, and known as undertakings or recognizances, the sureties are called bail. SOURCE: CC § 2780.

COL120106 The obligations of bail are governed by the laws specially applicable thereto. SOURCE: CC § 2781. NOTE: No 1970 Civil Code '§ 2782 - 2786 existed. ---------- COL120106 COL120106

A guaranty is a promise to answer for the debt, default, or miscarriage of another person. SOURCE: CC § 2787.

A person may become guarantor even without the knowledge or consent of the principal. SOURCE: CC § 2789. NOTE: No 1970 Civil Code '§ 2789-2791 existed. ---------- ARTICLE 2 CREATION OF GUARANTY

Where a guaranty is entered into at the same time with the original obligation, or with the acceptance of the latter by the guarantee, and forms with that obligation a part of the consideration to him, no other consideration need exist. In all other cases, there must be a conside…

Except as prescribed by the next section, a guaranty must be in writing, and signed by the guarantor; but the writing need not express a consideration. SOURCE: CC § 2793.

A promise to answer for the obligation of another, in any of the following cases, is deemed an original obligation of the promisor, and need not be in writing: 1. Where the promise is made by one who has received property of another upon an undertaking to apply it pursuant to suc…

A mere offer to guarantee is not binding, until notice of its acceptance is communicated by the guarantee to the guarantor; but an absolute guaranty is binding upon the guarantor without notice of acceptance. SOURCE: CC § 2795. NOTE: No 1970 Civil Code '§ 2796-2798 existed. -----…

In a guaranty of a contract, the terms of which are not then settled, it is implied that its terms be such as will not expose the guarantor to greater risks than he would incur under those terms which are most common in similar contracts at the place where the principal contract …

COL120106 A guaranty to the effect that an obligation is good, or is collectible, imports that the debtor is solvent, and that the demand is collectible by the usual legal proceedings, if taken with reasonable diligence. SOURCE: CC § 2800.

A guaranty, such as is mentioned in the last section, is not discharged by an omission to take proceedings upon the principal debt, or upon any collateral security for its payment, if no part of the debt could have been collected thereby. SOURCE: CC § 2801.

In the cases mentioned in § 31302, the removal of the principal from Guam, leaving no property therein from which the obligation might be satisfied, is equivalent to the insolvency of the principal in its effect upon the rights and obligations of the guarantor. SOURCE: CC § 2802.…

A Guaranty is deemed to be unconditional unless its terms import some condition precedent to the liability of the guarantor. SOURCE: CC § 2806. COL120106

A guarantor of payment or performance is liable to the guarantee immediately upon the default of the principal, and without demand or notice. SOURCE: CC § 2807.

Where one guarantees a conditional obligation, his liability is commensurate with that of the principal, and he is not entitled to notice of the default of the principal, unless he is unable, by the exercise of reasonable diligence, to acquire information of such default, and the…

The obligation of a guarantor must be neither larger in amount nor in other respects more burdensome than that of the principal, and if in its terms it exceeds it, it is reducible in proportion to the principal obligation. SOURCE: CC § 2809.

A guarantor is not liable if the contract of the principal is unlawful, but he is liable, notwithstanding any mere personal inability of the principal, though the disability be such as to make the contract void against the principal. SOURCE: CC § 2810. NOTE: No 1970 Civil Code '§…

A guaranty relating to a future liability of the principal, under succes- sive transactions, which either continue his liability or from time to time renew it after it has been satisfied, is called a continuing guaranty. SOURCE: CC § 2814.

A continuing guaranty may be revoked at any time by the guarantor, in respect to future transactions, unless there is a continuing consideration as to such transactions which he does not renounce. SOURCE: CC § 2815. NOTE: No 1970 Civil Code '§ 2816-2818 existed. ---------- ARTICL…

A guarantor is exonerated, except so far as he may be indemnified by the principal, if by any act of the creditor, without the consent of the guarantor, the original obligation of the principal is altered in any respect, or the remedies or rights of creditor against the principal…

COL120106 A promise by a creditor, which for any cause is void, or voidable by him at his option, does not alter the obligation or suspend or impair the remedy, within the meaning of the last section. SOURCE: CC § 2820.

The rescission of an agreement altering the original obligation of a debtor, or impairing the remedy of a creditor, does not restore the liability of a guarantor who has been exonerated by such agreement. SOURCE: CC § 2821.

The acceptance, by a creditor, of anything in partial satisfaction of an obligation reduces the obligation of a guarantor thereof, in the same measure as that of the principal, but does not otherwise affect it. SOURCE: CC § 2822.

Mere delay on the part of a creditor to proceed against the principal, or to enforce any other remedy, does not exonerate a guarantor. SOURCE: CC § 2823.

A guarantor, who has been indemnified by the principal, is liable to the creditor to the extent of the indemnity, notwithstanding that the creditor, without the assent of the guarantor, may have modified the contract or released the principal. SOURCE: CC § 2824.

A guarantor is not exonerated by the discharge of his principal by operation of law, without the intervention or omission of the creditor. SOURCE: CC § 2825. NOTE: No 1970 Civil Code '§ 2826-2830 existed. ---------- COL120106 COL120106

A surety is one who at the request of another, and for the purpose of securing to him a benefit, becomes responsible for the performance by the latter of some act in favor of a third person, or hypothecates property as security therefor. SOURCE: CC § 2831.

One who appears to be a principal, whether by the terms of a written instrument or otherwise, may show that he is in fact a surety, except as against persons who have acted on the faith of his apparent character of principal. SOURCE: CC § 2832. NOTE: No 1970 Civil Code '§ 2833-28…

A surety cannot be held beyond the express terms of his contract, and if such contract prescribes a penalty for its breach, he cannot in any case be liable for more than the penalty. SOURCE: CC § 2836.

In interpreting the terms of a contract of suretyship, the same rules are to be observed as in the case of other contracts. SOURCE: CC § 2837.

Notwithstanding the recovery of a judgment by a creditor against a surety, the latter still occupies the relation of surety. SOURCE: CC § 2838.

Performance of the principal obligation, or an offer of such performance, duly made as provided in this Code, exonerates a surety. SOURCE: CC § 2839.

A surety is exonerated -- 1. In like manner with a guarantor; 2. To the extent to which he is prejudiced by any act of the creditor which would naturally prove injurious to the remedies of the surety or inconsistent with his rights, or which lessens his security; or, 3. To the ex…

A surety has all the rights of a guarantor, whether he becomes person- ally responsible or not. SOURCE: CC § 2844.

A surety may require his creditor to proceed against his principal, or to pursue any other remedy in his power which the surety cannot himself pursue, and which would lighten his burden; and if in such case the creditor neglects to do so, the surety is exonerated to the extent to…

A surety may compel his principal to perform the obligation when due. SOURCE: CC § 2846.

If a surety satisfied the principal obligation, or any part thereof, whether with or without legal proceedings, the principal is bound to reimburse what he has disbursed, including necessary costs and expenses; but the surety has no claim for reimbursement against other persons, …

A surety, upon satisfying the obligation of the principal, is entitled to enforce every remedy which the creditor then has against the principal to the extent of reimbursing what he has expended, and also to require all his co-sureties to contribute thereto, without regard to the…

A surety is entitled to the benefit of every security for the performance of the principal obligation held by the creditor, or by a co-surety at the time of entering into the contract of suretyship, or acquired by him afterwards, whether the surety was aware of the security or no…

Whenever property of a surety is hypothecated with property of the principal, the surety is entitled to have the property of the principal first applied to the discharge of the obligation. SOURCE: CC § 2850. NOTE: No 1970 Civil Code '§ 2851-2853 existed. ---------- ARTICLE 4 RIGH…

A creditor is entitled to the benefit of everything which a surety has received from the debtor by way of security for the performance of the obligation, and may, upon the maturity of the obligation, compel the application of such security to its satisfaction. SOURCE: CC § 2854. …

A lien is a charge imposed in some mode other than by a transfer in trust upon specific property by which it is made security for the performance of an act. SOURCE: CC § 2872.

Liens are either general or special. SOURCE: CC § 2873. COL120106

A general lien is one which the holder thereof is entitled to enforce as a security for the performance of all the obligations, or all of a particular class of obligations, which exist in his favor against the owner of the property. SOURCE: CC § 2874.

A special lien is one which the holder thereof can enforce only as security for the performance of a particular act or obligation, and of such obligations as may be incidental thereto. SOURCE: CC § 2875.

Where the holder of a special lien is compelled to satisfy a prior lien for his own protection, he may enforce payment of the amount so paid by him, as a part of the claim for which his own lien exists. SOURCE: CC § 2876.

Contracts of mortgage, bottomry and respondentia, are all subject to the provisions of this Chapter. SOURCE: CC § 2877. NOTE: Article II of Chapter II [Mortgage of Personal Property], Chapter II-A [Conditional Sales] and Chapter III [Pledge], all of Title XIV of the Civil Code, w…

1. By contract of the parties; or 2. By operation of law. SOURCE: CC § 2881.

No lien arises by mere operation of law until the time at which the act to be secured thereby ought to be performed. SOURCE: CC § 2882.