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of another upon an undertaking to apply it pursuant to such promise; or by one who has received a discharge from an obligation in whole or in part, in consideration of such promise;

2. Where the creditor parts with value, or enters into an obligation, in consideration of the obligation in respect to which the promise is made, in terms or under circumstances such as to render the party making the promise the principal debtor, and the person in whose behalf it is made, his surety;

3. Where the promise, being for an antecedent obligation of another, is made upon the consideration that the party receiving it cancels the antecedent obligation, accepting the new promise as a substitute therefor; or upon the consideration that the party receiving it releases the property of another from a levy; or his person from imprisonment under an execution on a judgment obtained upon the antecedent obligation; or upon a consideration beneficial to the promisor, whether moving

the antecedent obligation, or from another person;

4. Where a factor undertakes, for a commission, to sell merchandise and guarantee the sale;

5. Where the holder of an instrument for the payment of money, upon which a third person is or may become liable to him, transfers it in payment of a precedent debt of his own, or for a new consideration, and in connection with such transfer enters into a promise respecting such instrument.

om either party to

2795. A mere offer to guarantee is not binding, until notice of its acceptance is communicated by the guarantee to the guarantor; but an absolute guaranty is binding upon the guarantor without notice of acceptance.

ARTICLE III.
Interpretation of Guaranty.

Section

Section 2799. Incomplete contract guar- 2801. Recovery of guaranty. anteed.

2802. Guarantor's liability. 2800. Guaranty of obligation.

2799. In a guaranty of a contract, the terms of which are not then settled, it is implied that its terms shall be such as will not expose the guarantor to greater risks than he would incur under those terms which are most common in similar contracts at the place where the principal contract is to be performed.

2800.. A guaranty to the effect that an obligation is good, or is collectible, imports that the debtor is solvent, and that the demand is collectable by the usual legal proceedings, if taken with reasonable diligence.

2801. A guaranty, such as is mentioned in the last section, is not discharged by an omission to take proceedings upon the principal debt, or upon any collateral security for its payment, if no part of the debt could have been collected thereby.

2802. In the cases mentioned in section two thousand eight hundred, the removal of the principal from the state, leaving no property therein from which the obligation might be satisfied, is equiva

lent to the insolvency of the principal in its effect upon the rights and obligations of the guarantor.

ARTICLE IV.
Liability of Guarantors.

Section

Section 2806. Guaranty, how construed. 2809. Obligation limited to prin2807. Liability, guaranty of pay- cipals. ment.

2810. Void on illegal contract. 2808. Liability on conditional ob

ligation. 2806. A guaranty is to be deemed unconditional unless its terms import some condition precedent to the liability of the guarantor.

2807. A guarantor of payment or performance is liable to the guarantee immediately upon the default of the principal, and without demand or notice.

2808. Where one guarantees a conditional obligation, his liability is commensurate with that of the principal, and he is not entitled to notice of the defaut of the principal, unless he is unable, by the exercise of reasonable diligence, to acquire information of such default, and the creditor has actual notice thereof.

2809. The obligation of a guarantor must be neither larger in amount nor in other respects more burdensome than that of the principal; and if in its terms it exceeds it, it is reducible in proportion to the principal obligation.

2810. A guarantor is not liable if the contract of the princpal is unlawful; but he is liable notwithstanding any mere personal disability of the principal, though the disability be such as to make the contract void against the principal.

ARTICLE V.
Continuing Guaranty.

Section

Section

2814. Continuing guaranty, what. 2815. Revocation.

2814. A guaranty relating to a future liability of the principal, under successive transactions, which either continue his liability or from time to time renew it after it has been satisfied, is called a continuing guaranty.

2815. A continuing guaranty may be revoked at any time by the guarantor, in respect to future transactions, unless there is a continuing consideration as to such tranactions which he does not renounce.

ARTICLE VI.

Exoneration of Guarantors. Section

Section 2819. What dealings with debtor 2823. Delay of creditor does not exonerates guarantor.

discharge guarantor. 2820. Void promises.

2824. Guarantor indemnified by 2821. Rescission of alteration.

the debtor, not exonerated. 2822. Part performance.

2825. Discharge of principal by

law, guarantor not released. 2819. A guarantor is exonerated, except so far as he may be indemnified by the principal, if by any act of the creditor, without the consent of the guarantor, the original obligation of the principal is

Utered in any respect, or the remedies or rights of the creditor against the principal, in respect thereto, in any way impaired or suspended.

2820. A promise by a creditor, which for any cause is void, or voidable by him at his option, does not alter the obligation or suspend or impair the remedy, within the meaning of the last section.

2821. The rescission of an agreement altering the original obligation of a debtor, or impairing the remedy of a creditor does not restore the liability of a guarantor who has been exonerated by such agreement.

2822. The acceptance, by a creditor, of anything in partial satisfaction of an obligation, reduces the obligation of a guarantor thereof, in the same measure as that of the principal, but does not otherwise affect it.

2823. Mere delay on the part of a creditor to proceed against the principal, or to enforce any other remedy, does not exonerate a guarantor.

2824. A guarantor, who has been indemnified by the principal, is liable to the creditor to the extent of the indemnity, notwithstanding that the creditor, without the assent of the guarantor, may have modified the contract or released the principal.

2825. A guarantor is not exonerated by the discharge of his principal by operation of law, without the intervention or omission of the creditor.

CHAPTER II.

Suretyship.
Article I. Who are Sureties.

II. Liability of Sureties.
III. Rights of Sureties.
IV. Rights of Creditors.
V. Letter of Credit.

ARTICLE I.

Who are Sureties. Section

Section 2831. Surety.

2832. Apparent principal may

show that he is surety. 2831. A surety is one who at the request of another, and for the purpose of securing to him a benefit, becomes responsible for the performance by the latter of some act in favor of a third person, or hypothecates property as security therefor.

2832. One who appears to be a principal, whether by the terms of a written instrument or otherwise, may show that he is in fact a surety, except as against persons who have acted on the faith of his apparent character of principal.

ARTICLE II.

Liability of Sureties.

Section

2836. Limit of obligations.
2837. Rules of interpretation.
2838. Judgment against surety,

generally.

Section
2839. Offer of performance, gen-

erally.
2840. Creditors' acts discharging

surety.

2836. A surety cannot be held beyond the express terms of his contract, and if such contract prescribes a penalty for its breach, he cannot in any case be liable for more than the penalty.

2837. In interpreting the terms of a contract of suretyship, the same rules are to observed as in the case of other contracts.

2838. Notwithstanding the recovery of judgment by a creditor against a surety, the latter still occupies the relation of surety.

2839. Performance of the principal obligation, or an offer of such performance, duly made as provided in this code, exonerates a surety. 1873–260.

2840. A surety is exonerated--
1. In like manner with a guarantor;

2. To the extent to which he is prejudiced by any act of the creditor which would naturally prove injurious to the remedies of the surety or inconsistent with his rights, or which lessens his security; or,

3. To the extent to which he is prejudiced by an omission of the creditor to do anything, when required by the surety, which it is his duty to do.

ARTICLE III.

Rights of Sureties. Section

Section 2844. Rights same as guarantor. 2848. Surety same as creditor. 2845. Surety may demand pro- 2849. Surety entitled benefits of

ceedings against principal. securities held by creditors. 2846. Principal to perform obli- 2850. Principal's property taken gations, when due.

first. 2847. Principal liable to surety.

2844. A surety has all the rights of a guarantor, whether he become personally responsible of not.

2845. A surety may require his creditor to proceed against the principal, or to pursue any other remedy in his power which the surety cannot himself pursue, and which would lighten his burden; and if in such case the creditor neglects to do so, the surety is exonerated to the extent to which he is thereby prejudiced.

2846. A surety may compel his principal to perform the obligation when due.

2847. If a surety satisfies the principal obligation, or any part thereof, whether with or without legal proceedings, the principal is bound to reimburse what he has disbursed, including necessary costs and expenses; but the surety has no claim for reimbursement against other persons, though they may have been benefited by his act, except as prescribed by the next section.

2848. A surety, upon satisfying the obligation of the principal, is entitled to enforce every remedy which the creditor then has against the principal to the extent of reimbursing what he has expended, and also to require all his co-sureties to contribute thereto, without regard to the order of time in which they became such.

2849. A surety is entitled to the benefit of every security for the performance of the principal obligation held by the creditor, or by a Co-si

ty a

he time of entering into the contract of suretyship, or acquired by him afterwards, whether the surety was aware of the security or not.

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2850. Whenever property of a surety is hypothecated with property of the principal, the surety is entitled to have the property of the principal first applied to the discharge of the obligation.

ARTICLE IV.

Rights of Creditors.

Section
2854. Creditor entitled to surety's

securities.

2854. A creditor is entitled to the benefit of everything which a surety has received from the debtor by way of security for the

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