Surety Definition and Legal Meaning

On this page, you'll find the legal definition and meaning of Surety, written in plain English, along with examples of how it is used.

What is Surety?

(n) Surety is the person who guarantees certain performance by some person to another person where by accepting the responsibility for the due performance of the agreement for which he stood as surety. If the person responsible for the performance fail to accomplish his duty, the surety is responsible to compensate it

History and Definition of Surety

Surety is an essential element of contract law, and essentially refers to a legal agreement in which one party (the surety) agrees to be held liable for the debts or obligations of another party (the principal). Essentially, the surety is a guarantee that a debt will be paid or that an obligation will be fulfilled.

Suretyship has been recognized since ancient times, and was commonly used in medieval commerce. It was also used in feudal England, where lords required sureties from their vassals to ensure their loyalty and proper behavior.

Today, surety is used in various forms, including surety bonds in construction projects, performance bonds in business deals, and personal guaranties for loans, among others. The terms of the surety agreement are typically laid out in a contract, and can vary widely depending on the context.

Examples of Surety

  1. A construction contractor obtains a surety bond, which guarantees that the contractor will complete the project as agreed, or the surety will step in to pay for the completion.

  2. A landlord requires a surety from a tenant, which guarantees that the tenant will pay rent and other fees on time, and compensate for any damages caused by the tenant.

  3. A bank requires a surety from a borrower, which guarantees that the borrower will repay the loan and any interest due, or the surety will be liable for the debt.

Legal Terms Similar to Surety

  1. Guaranty: A promise to pay another party's debt or fulfill their obligation if they fail to do so.

  2. Indemnity: A contractual agreement in which one party agrees to compensate another party for losses and damages that may arise from a particular event.

  3. Collateral: Property or assets that a borrower pledges as security for a loan or debt, which can be seized if the borrower fails to repay the loan.