LAW 506-002 – Contracts II

Suretyship Provision


  1. The following classes of contracts are subject to . . . the Statute of Frauds, forbidding enforcement unless there is a written memorandum . . . .
    1. a contract to answer for the duty of another (the suretyship provision);
Surety
A surety is one who, at the request of another, and for the purpose or securing to him a benefit, becomes responsible for the performance by the latter of some act in favor of a third person

e.g., A promises B that A will pay C's debt. C only has an obligation to B.

Promising the obligor that you'll pay off his debt is not a suretyship.

Co-signing a loan makes you a co-obligor, not a surety.

A novation is not a surety.

Restatement Second of Contracts § 112

Requirement of Suretyship

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A contract is not within the Statute of Frauds as a contract to answer for the duty of another unless the promisee is an obligee of the other's duty, the promisor is a surety for the other, and the promisee knows or has reason to know of the suretyship relation.

Exception:

Restatement Second of Contracts § 116

Main Purpose; Advantage to Surety

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A contract that all or part of a duty of a third person to the promisee shall be satisfied is not within the Statute of Frauds as a promise to answer for the duty of another if the consideration for the promise is in fact or apparently desired by the promisor mainly for his own economic advantage, rather than in order to benefit the third person. If, however, the consideration is merely a premium for insurance, the contract is within the Statute.