Signed C.
By this contract, C binds himself to pay B the purchase price of the goods, not exceeding $2,000.00, if A fails to pay same.
Contracts of guaranty are of many kinds. They are frequently given to secure contracts of personal service, for the construction of buildings, for mercantile transactions, or in fact for any kind of business transaction. They are contracts, and must contain all the elements of a simple contract, such as consideration, mutuality, competent parties, etc. If a contract of guaranty is given at the time the original contract is made, and is a part of the same transaction, the consideration which supports the original contract supports the contract of guaranty. Otherwise, the contract of guaranty must be supported by a separate consideration.
186. Contract of an Indorser. One form of suretyship obligation, or obligations, to answer for the debt or default of another, is that of an indorser to a negotiable instrument. The contract of an indorser differs from that of a guarantor, and from that of a surety. For example, A gives the following promissory note to B:
Chicago, Ill., Jan. 4, 1909.
Ninety days after date I promise to pay to the order of B, one thousand dollars.
Signed A.
B indorses the note by writing his name across the back thereof, and delivers it to C for $985.00. The contract now existing between A, B, and C, is one of suretyship, in which A is principal, B creditor, and C promisor. A promisor in suretyship may be either a surety, a guarantor or an indorser. In this particular case the obligation of C, the promisor, is that of an indorser. The principal obligation of C to B is that if the note is presented for payment to A at maturity, and upon A's failure to pay, due notice is promptly given to C, C will be responsible to B for the amount due on the note. An indorser is also liable upon certain implied warranties in addition to his primary liability as above set forth. In the language of the courts, the technical liability of an indorser is as follows:
"I hereby agree by the acceptance by you of title of this paper, and the value you confer upon me in exchange, to pay you, or any of your successors in title, the amount of this instrument, providing you or any of your successors in title present this note to the maker on the date of maturity, and notify me without delay of his failure or refusal to pay. And I warrant that all the parties had capacity and authority to sign, and that the obligation is binding upon each of them. And I will respond to the obligation created by these warranties even though you do not demand payment of the maker at maturity, or notify me of default."