The distinction between sureties and guarantors is hereby abolished. The terms and their derivatives, wherever used in this code or in any other statute or law of this state now in force or hereafter enacted, shall have the same meaning as defined in this section. A surety or guarantor is one who promises to answer for the debt, default, or miscarriage of another, or hypothecates property as security therefor. Guaranties of collection and continuing guaranties are forms of suretyship obligations, and except in so far as necessary in order to give effect to
provisions specially relating thereto, shall be subject to all provisions of law relating to suretyships in general. A letter of credit is not a form of suretyship obligation. For purposes of this section, the term “letter of credit” means a “letter of credit” as defined in paragraph (10) of subdivision (a) of Section 5102 of the Commercial Code whether or not the engagement is governed by Division 5 (commencing with Section 5101) of the Commercial Code.
SuretyshipDefinition of Suretyship
Section § 2787
This law says that there's no longer a difference between being a surety or a guarantor; both mean the same in legal terms. Essentially, both involve someone promising to pay another person's debt or using their property to guarantee it. Different types of these obligations, like guaranties of collection, are still treated as suretyship. However, a letter of credit, which is a financial tool used in transactions, is not considered a suretyship. The specific definition from the Commercial Code applies here for letters of credit.
sureties guarantors suretyship
