Suretyship Law and Legal Definition
Suretyship refers to a person's undertaking to fulfill the obligation of another toward a third person to protect his/her businesses against the possible dishonesty of their employees. A suretyship obligation must be in writing, and signed by the surety, but the writing need not express a consideration. A suretyship obligation is deemed to be unconditional unless a condition precedent is requisite to the liability of the surety.
The following is an example of the state statute (California) explaining suretyship:Cal Civ Code § 2787 states that a surety or guarantor is one who promises to answer for the debt, default, or miscarriage of another, or hypothecates property as security. Guaranties of collection and continuing guaranties are forms of suretyship obligations, and except in so far as necessary in order to give effect to provisions specially relating thereto, shall be subject to all provisions of law relating to suretyship in general. A letter of credit is not a form of suretyship obligation.