Suretyship Theory

Suretyship theory refers to a legal concept where one party, called the surety, agrees to take responsibility for the debt or obligation of another party, known as the principal, if the principal fails to meet their obligations. Essentially, the surety acts as a guarantor, promising to pay or perform if needed. This arrangement is commonly used in financial agreements, such as loans or leases, where the lender seeks additional security. It helps reduce risk for the lender while also allowing individuals or businesses access to resources they may not qualify for on their own.