The surety's signature should, as a rule, be witnessed by a bank official, and some bankers require it to be witnessed by two officials. Where the surety lives in another town, the document should be sent to a bank in that town and the surety be requested to call there to sign it.
If there are any alterations in the docu ment, they should be initialled by the guarantor ; and if the guarantee being given is in addition to one already signed by him for the same account, a clause should be added at the end of the guarantee to the effect that " this guarantee is in addition to and not in substitution of my guarantee dated for ," and the clause should be signed by the guarantor.
Where there are more guarantors than one, the guarantee should be " joint and several." The banker can then sue one, or all, of the guarantors as he may consider necessary. If he sues one surety and fails to obtain all that is required. he may then sue the others. This could not be done if the guarantee was " joint " only. In a " joint " guarantee, all the sureties must be sued together, and if one of them died his estate would not be liable. The banker in that case would have to look to the sur viving guarantors ; but if the guarantee is " joint and several," the estate of a deceased surety would be liable. In a " several " guarantee, each one of the guarantors may be sued separately for the full amount. The most satisfactory guarantee for a banker to take is, therefore, a " joint and several " one.
A consideration is not necessary in a guarantee under seal, but in a guarantee under hand, i.e. a simple contract, there must be a consideration. The consideration, as a general rule, is the granting of an advance to a customer against the guarantee, or it may be the granting cf further time to a debtor. A banker's guarantee usually states the consideration, but the document is not invalid merely by reason that the consideration is not expressed therein. By the Mercantile Law Amendment Act, 1856, 19 t\: 20 Viet. c. 97. Section 3, " no special promise to be made by any person after the passing of this Act to answer for the debt, default, or miscarriage of another person, being in writing, and signed by the party to be charged therewith, or some other person by him thereunto lawfully authorised, shall be deemed invalid to support an action, suit, or other proceeding to charge the person by whom such promise shall have been made, by reason only that the con sideration for such promise does not appear in writing, or by necessary inference from a written document."
An important point in connection with a guarantee is that it should be a continuing guarantee, that is, a security which will continue, although the balance of the debtor's account may fluctuate from time to time. A guarantee should therefore expressly state that it " shall be a continuing guarantee," otherwise it might be held to cover merely the debt which existed at the time the guarantee was given.
\\'here a guarantee for, say, 9,000 is to continue in force until the expiration of three months' notice in writing, and when the account is overdrawn, say, 1.500, the surety gives notice, can the banker let the customer go on drawing cheques pending the notice and let him draw out the whole 11,000 ? Sir John Paget, in his Gilbart Lecture (No. 3), 1909, considers that " the banker would run great risk if he adopted this course voluntarily . . . all outstanding cheques, bills accepted for the customer prior to revocation and maturing during pendency of notice and things of that sort are covered by the clause. Possibly it might cover other transactions in the ordinary course of business begun prior to revocation and completed during currency 01 notice." With respect to a guarantee which con tained the words " to continue in force until three months after notice," it has been held that notice to the bank of the death of the guarantor amounted to a determination of the guarantee so far as future advances were concerned.
If there is no question of notice arising, when the surety informs the banker that he withdraws from any further liability under his guarantee, it will be at the banker's own risk if he pays any further cheques after receipt of such notice ; but if he has promised the debtor to pay certain specific cheques, those cheques must be paid.