Q&As

Can the beneficiary of a guarantee claim amounts under a guarantee in addition to the amounts owed to it from the principal debtor which have been guaranteed?

read titleRead full title
Published on LexisPSL on 20/01/2017

The following Banking & Finance Q&A provides comprehensive and up to date legal information covering:

  • Can the beneficiary of a guarantee claim amounts under a guarantee in addition to the amounts owed to it from the principal debtor which have been guaranteed?
  • Principle of co-extensiveness

Can the beneficiary of a guarantee claim amounts under a guarantee in addition to the amounts owed to it from the principal debtor which have been guaranteed?

Principle of co-extensiveness

As explained in The secondary nature of the contract: Paget's Law of Banking [18.3]a guarantee obligation is secondary and accessory to the obligation the performance of which is guaranteed.

The guarantor's liability for the non-performance of the principal debtor's obligation is co-extensive with that obligation. If the principal debtor's obligation turns out not to exist, or is void, diminished or discharged, so is the guarantor's obligation in respect of it.

See also ‘Guarantees—Characteristics of guarantees’ in Practice

Related documents:

Popular documents