The Concept and Function of Suretyship
For a creditor, the enforcement of a guarantee begins with understanding the legal nature of suretyship. Under Article 891 of the Civil Code of Georgia, under a contract of suretyship the surety undertakes an obligation to stand as surety before the creditor for a third person, for the performance of that person’s obligation. The surety thus answers to the creditor directly, with an obligation of its own, for the principal debtor’s performance.
The second part of the same article keeps the frame of suretyship open: suretyship may also be applied to future and conditional obligations. This means that the creditor and the surety may agree today on a guarantee for an obligation that will arise in the future or that depends on the occurrence of a condition — for example, for future claims connected with the completion of construction or the use of a loan. It is precisely this flexibility that keeps suretyship the principal protective instrument of creditors in banking and construction practice.