Title 22, Guaranty, Indemnity, and Suretyship

In this chapter, unless the context or subject matter otherwise requires: 1. A "continuing guaranty" means a guaranty relating to a future liability of the principal under successive transactions which either continue the liability or from time to time renew it after it has been …

A person may become a guarantor without the knowledge or consent of the principal.

When a guaranty is entered into at the same time as the original obligation or at the same time as the acceptance of the original obligation by the guarantee and forms, with that obligation, a part of the consideration to the guarantee, no other consideration is necessary. In all…

Except when a guaranty is deemed an original obligation as provided in section 22-01-05, a guaranty must be in writing and signed by the guarantor, but the writing need not express a consideration.

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. When the promise is made by one who has received property of another upon an undertaking to apply it pursuant to such pr…

A mere offer to guaranty is not binding until notice of its acceptance is communicated by the guarantee to the guarantor. An absolute guaranty is binding upon the guarantor without a notice of acceptance.

When a manufacturer, wholesaler, or distributor furnishes merchandise to any agent, salesman, or dealer whose execution of bond or obligation to the manufacturer, wholesaler, or distributor has been joined in by a surety or guarantor, the manufacturer, wholesaler, or distributor …

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

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 the same are taken with reasonable diligence. Such a guaranty is not discharged by any omission to take pr…

A guaranty is to be deemed unconditional unless its terms import some condition precedent to the liability of the guarantor.

A guarantor of payment or performance is liable to the guarantee immediately upon the default of the principal and without a demand or notice.

The liability of a guarantor who guaranties a conditional obligation is commensurate with that of the guarantor's principal and the guarantor is not entitled to notice of the default of the principal unless the guarantor is unable, by the exercise of reasonable diligence, to acqu…

The obligation of a guarantor must be neither larger in amount, nor in other respects more burdensome, than that of the principal. A stockholder or partner of any entity, including a limited liability company, business corporation, professional corporation, and partnership, may e…

A guarantor is not liable if the contract of the principal is unlawful, but the guarantor is liable notwithstanding any mere personal disability of the principal even though the disability is such as to make the contract void as against the principal.

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 the guarantor does not renounce. If the contract of guaranty signed by the guarantor so states, the revocat…

A guarantor is exonerated, except insofar as the guarantor may be indemnified by the principal, if, by any act of the creditor without the consent of the guarantor: 1. The original obligation of the principal is altered in any respect; or 2. The remedies or rights of the creditor…

A promise by a creditor, which for any cause is void or voidable by the creditor at the creditor's option, does not alter the obligation nor suspend nor impair the remedy within the meaning of section 22-01-15.

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.

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.

Mere delay on the part of a creditor to proceed against the principal or to enforce any other remedy does not exonerate a guarantor.

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.

A guarantor is not exonerated by the discharge of the guarantor's principal by operation of law without the intervention or omission of the creditor.

Indemnity is a contract by which one engages to save another from a legal consequence of the conduct of one of the parties or of some other person.

An agreement to indemnify a person against an act thereafter to be done is void if the act is known by such person at the time of doing it to be unlawful.

An agreement to indemnify a person against an act already done is valid, even though the act was known to be wrongful, unless it was a felony.

An agreement to indemnify against the acts of a certain person applies not only to that person's acts and their consequences, but also to those of that person's agents.

An agreement to indemnify several persons applies to each unless a contrary intention appears.

One who indemnifies another person against an act to be done by the latter is liable jointly with the person indemnified and separately to every person injured by such act.

In the interpretation of a contract of indemnity, unless a contrary intention appears, the following rules are to be applied: 1. Upon an indemnity against liability, expressly or in other equivalent terms, the person indemnified is entitled to recover upon becoming liable. 2. Upo…

When one person at the request of another person engages to answer in damages, whether liquidated or unliquidated, for any violation of duty on the part of the latter, the former is entitled to be reimbursed in the same manner as a surety for whatever the former may pay.

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

1. As used in this section: a. "Motor carrier transportation contract" means a contract, agreement, or understanding covering the transportation of property for compensation or hire by the motor carrier; entrance on property by the motor carrier for the purpose of loading, unload…

A surety is one who, at the request of another and for the purpose of securing to the latter 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.

One who appears to be a principal, whether by the terms of a written instrument or otherwise, may show that the person in fact is a surety except as against persons who have acted on the faith of that person's apparent character of principal.

A surety cannot be held beyond the express terms of the surety's contract and if such contract prescribes a penalty for its breach, the surety cannot be liable in any case for more than the penalty.

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

A surety still occupies the position of surety even though a creditor recovers a judgment against the surety.

A surety is exonerated: 1. In like manner with a guarantor; 2. By performance of the principal obligation or tender of such performance duly made as provided in this code; 3. To the extent to which the surety is prejudiced by any act of the creditor which would naturally prove in…

A surety has all the rights of a guarantor whether the surety becomes personally responsible or not.

A surety may require the surety's creditor to proceed against the principal or to pursue any other remedy in the creditor's power which the surety cannot pursue and which would lighten the surety's burden. If the creditor neglects to do so, the surety is exonerated to the extent …

A surety may compel the surety's principal to perform the obligation when due.

If a surety satisfies the principal obligation, or any part thereof, with or without legal proceedings, the principal is bound to reimburse the surety for what the surety has disbursed, including necessary costs and expenses. A surety has no claim, however, for reimbursement agai…

A surety, upon satisfying the obligations of the principal, is entitled to enforce every remedy which the creditor then has against the principal, to the extent of reimbursing what the surety has expended, and also to require all of the surety's cosureties to contribute thereto w…

A surety is entitled to the benefit of every security for the performance of the principal obligation held by the creditor or by a cosurety at the time of entering into the contract of suretyship or acquired by the surety afterwards, whether the surety was aware of the security o…

Whenever property of a surety is hypothecated with the property of the principal, the surety is entitled to have the property of the principal first applied to the discharge of the obligation.

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 upon the maturity of the obligation the creditor may compel the application of such security to the satisfaction of the ob…

It is lawful for any party of whom a bond, undertaking, or other obligation is required, to agree with that party's surety or sureties for the deposit of any or all moneys and assets for which that party and that party's surety or sureties are or may be held responsible, with a b…