A surety is one who undertakes to pay money or do any other act in the event that his principal fails therein. Sureties are often used as guarantees for loans, with most requiring them being obligated by law if repayment becomes due and their performance of duties/promise entitles him/her against payment from someone else obliged under such circumstances – usually regardless whether this person paid up beforehand!
The most common use of a surety is in contracts where one party has doubts about the ability of the other party to meet their obligations. To decrease risk, the counterparty may be required to provide a guarantor, who would then engage into a contract of suretyship with the guarantor. This is an attempt to reduce the risk of the lender, which could result in cheaper interest rates for the borrower. A “surety bond” can be used as a sort of surety.
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