LOUISIANA SECURITY DEVICES

Prof. Crawford, 2011

SYNONYMS: Surety = Guarantor Lien = Privilege Suretyship When one person guarantees performance of someone elses obligation, by saying that if the other person doesnt pay, the surety will. The SURETY and the CREDITOR form a contract. The principal obligor is not party to a suretyship agreement. Standard practice is to require a surety to bind himself SOLIDARILY with the principal obligor and any other sureties. Solidarity involves the rights of DIVISION: one surety may be called upon to perform the entire obligation if the principal obligor does not and may then sue any other sureties for their portion (See: McCausland v. Lyons) and DISCUSSION: the obligee goes after the principal obligor for everything he can before going after sureties A surety usually is forced to waive division and discussion. The law regarding MAKERS of a note is different from that regarding SURETIES. CIVIL CODE ARTICLES: 3037 says when someone is a surety: If the person signed off on the debt but didn't receive anything himself, he is a SURETY. Receiving something and signing off makes one a co-maker of a note. 3038 Suretyship must be express and in writing. NO SUCH THING AS A VERBAL SURETYSHIP. 3039 Pledging suretyship is enough to make it effective; creditors need not give notice of acceptance

3040 Suretyship may be qualified, conditioned, or limited in any lawful manner. 3061 Suretyship may be revoked by surety giving notice to the creditor. LIMITATIONS: surety may NOT get out of -responsibility to pay debts the creditor has already incurred, -debts the creditor is bound to let the principal obligor incur -any indebtedness resulting from creditors detrimental reliance on the suretys guarantee. (The surety might only be able to prevent further debt from piling up from the time he gives notice of revocation.) 3 KINDS OF SURETYSHIP

Art. 3041
-commercial suretyships -legal suretyships -ordinary suretyships Ordinary suretyship: construe in favor of surety. art 3044.