cosureties

Cosureties are individuals or entities who jointly guarantee the same debt or obligation. When two or more parties become cosureties for a single principal, they share the responsibility for ensuring the debt is repaid. If the principal defaults, any of the cosureties can be held liable for the entire amount owed, regardless of how many cosureties there are.

The principle of contribution is central to the relationship between cosureties. This means that if one cosurety is forced to pay more than their proportionate share of the debt, they have the right to seek reimbursement from the other cosureties for the excess amount paid. The proportionate share is typically determined by the number of cosureties involved. For example, if there are three cosureties and the principal defaults, and one cosurety pays the full debt, they can then seek one-third of the debt from each of the other two cosureties.

Cosuretyship agreements are often established through a surety bond or a formal contract. This arrangement is common in various financial and legal contexts, such as business loans, construction projects, and legal proceedings where a bond is required. The primary purpose is to provide additional security for the creditor or obligee, as the presence of multiple guarantors increases the likelihood of recovery in case of default. It is important for all parties involved to understand the implications and potential liabilities associated with being a cosurety.