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Personal Guarantees and Sureties between Commercial Law and Consumers in the United States

Personal Guarantees and Sureties between Commercial Law and Consumers in the United States AbstractGuaranties and suretyships reduce the risk of default and today remain essential arrangements in many commercial and consumer transactions. A guarantor or surety promises to pay for the debt of a third party and may become primarily liable on that debt. Despite the significance of such a promise and the resulting obligation, U.S. law does not clearly distinguish between a guarantor and surety in a consumer or commercial context. This is of particular relevance, because in a consumer context a guaranty often has a gratuitous or sentimental element and a guarantor may not always be fully aware of the risks and liabilities involved with a guarantee promise. U.S. law generally considers guaranties and suretyships simply as third-party beneficiary contracts to which common law contract principles apply. This, in turn, makes guaranties and suretyships primarily a state law concern, resulting in significant differences of suretyship laws among all U.S. jurisdictions. As such, the U.S. lacks a uniform body of law in this area and makes consumer protection in a guaranty and suretyship context perfunctory at best. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png American Journal of Comparative Law Oxford University Press

Personal Guarantees and Sureties between Commercial Law and Consumers in the United States

American Journal of Comparative Law , Volume 62 (suppl_1) – Jul 1, 2014

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References (6)

Publisher
Oxford University Press
Copyright
© 2014 by the American Society of Comparative Law, Inc.
ISSN
0002-919X
eISSN
2326-9197
DOI
10.5131/AJCL.2013.0028
Publisher site
See Article on Publisher Site

Abstract

AbstractGuaranties and suretyships reduce the risk of default and today remain essential arrangements in many commercial and consumer transactions. A guarantor or surety promises to pay for the debt of a third party and may become primarily liable on that debt. Despite the significance of such a promise and the resulting obligation, U.S. law does not clearly distinguish between a guarantor and surety in a consumer or commercial context. This is of particular relevance, because in a consumer context a guaranty often has a gratuitous or sentimental element and a guarantor may not always be fully aware of the risks and liabilities involved with a guarantee promise. U.S. law generally considers guaranties and suretyships simply as third-party beneficiary contracts to which common law contract principles apply. This, in turn, makes guaranties and suretyships primarily a state law concern, resulting in significant differences of suretyship laws among all U.S. jurisdictions. As such, the U.S. lacks a uniform body of law in this area and makes consumer protection in a guaranty and suretyship context perfunctory at best.

Journal

American Journal of Comparative LawOxford University Press

Published: Jul 1, 2014

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