Gratuitous Surety Law and Legal Definition

Gratuitous surety means a surety who is not paid any consideration for becoming obliged to the creditor. For example a parent who signs as a surety for a child is a gratuitous surety. The liability of a gratuitous surety will not be extended to a contract which in the slightest degree varies from the one for the performance of which s/he became bound. The risk s/he runs will not be increased in any manner without his/her consent, nor will the possibility of his/her immediately protecting himself/herself in the event of default will be lessened.

In First Nat'l Bank v. Dunning, 18 Kan. App. 2d 518 (Kan. Ct. App. 1993), the court observed that “A gratuitous surety is a favorite of the law. The preferential status accorded a gratuitous surety has been adopted by the Kansas Supreme Court. The contract must be read to ascertain the intentions of the parties as expressed in the contract and the surety's obligation be neither extended nor reduced by judicial construction. The obligation underlying a surety agreement cannot be modified without the surety's assent. A modification which alters the surety's obligation will discharge the surety. However, the alteration must be a material change. Where, without the surety's consent, the principal and the creditor modify their contract otherwise than by extension of time of payment (a) the surety, other than a compensated surety, is discharged unless the modification is of a sort that can only be beneficial to the surety. A change is material when the nature of the contract is changed. This can happen when new obligations are imposed or when prior obligations are taken away. The ultimate question is whether the effect of the change is to place the surety in a different position than he occupied before the change was made. Material change has also been defined as a change that a careful and prudent person would regard as substantially increasing the risk of loss.”