Introduction
In commercial transactions, lenders or creditors often insist that a guarantor or surety undertakes to secure the obligations of a borrower. But what exactly does it mean to stand as a guarantor or surety? And what are the limits of such liability?
Nigerian courts have provided clear guidance on the nature, extent, and enforcement of guarantees and suretyship agreements. Below we explore key principles drawn from recent Court of Appeal and Supreme Court decisions.
Who is a Guarantor or Surety?
A guarantor or surety is someone who undertakes to answer for the debt, default, or miscarriage of another. The terms are often used interchangeably, though technically a surety may be regarded as more directly liable than a guarantor.
In Hydro-Tech (Nig) Ltd & Anor v. Leadway Assurance Co. Ltd & Ors (2016) LPELR-40146(CA), the Court defined surety:
“The Black’s Law Dictionary 8th Edition defines ‘Surety’ as: ‘A person who is primarily liable for the payment of another’s debt or the performance of another’s obligation.’”
— Per Massoud Abdulrahman Oredola, JCA.
Similarly, in Crown Flour Mills Ltd & Anor v. Olokun (2007) LPELR-8534(CA), the Court noted:
“A guarantor is technically a debtor because where the principal debtor fails to pay a debt, the guarantor will be called upon to pay the loan so guaranteed.”
— Per Ignatius Igwe Agube, JCA.
When Does the Guarantor’s/Surety’s Liability Arise?
The liability of a guarantor or surety arises immediately the principal debtor defaults, without the need for the creditor to first exhaust remedies against the debtor.
In Okafor v. Emenobi & Anor (2020) LPELR-51897(CA), the Court emphasized:
“The liability of the guarantor becomes due and mature immediately the debtor becomes unable to pay the outstanding debt. The guarantor’s liability is then said to have crystallized.”
— Per Bitrus Gyarazama Sanga, JCA.
Similarly, in Oduniyi v. WHOT REM Credit & Thrift Cooperative Society (2024) LPELR-62104(CA), the Court, relying on the Supreme Court in African Int’l Bank Ltd v. Integrated Dimensional Systems (2012) LPELR-9710(SC), stated:
“The fact that the obligation of the guarantor arises only when the principal has defaulted does not mean the creditor has to demand payment from the principal or from the surety before proceeding.”
— Per Binta Fatima Zubairu, JCA.
Independent Liability: Creditor Can Proceed Directly Against the Guarantor
One of the most important principles is that the guarantor’s obligation is independent and enforceable directly against them, even without first suing the principal debtor.
In AYLIU Quarry Asphalt Ltd. & Ors v. AMCON (2025) LPELR-80510(CA), the Court stated:
“Where a person personally guarantees the liability of a third party, a distinct and separate contract from the principal debtor’s is thereby created… The contract of guarantee can be enforced against the guarantor directly or independently without the necessity of joining the principal debtor.”
— Per Binta Fatima Zubairu, JCA.
Similarly, in Oduniyi v. WHOT REM Credit & Thrift Cooperative Society (2024), the Court reiterated that the creditor can elect to proceed against the guarantor without first demanding from the principal debtor.
What if the Principal Debtor is Absent or Deceased?
Even when the principal debtor is absent or deceased, the guarantor remains personally liable.
In Okocha v. Chibuogwu (2022) LPELR-59016(CA),the Court observed:
“A guarantor is personally liable for the debt guaranteed in the absence of the principal debtor or failure of the debtor to pay or perform contract.”
— Per Mohammed Ambi-Usi Danjuma, JCA.
The creditor may recover the entire debt from the guarantor, who can then seek contribution from the debtor’s estate.
Does Releasing the Principal Debtor Discharge the Guarantor?
Not necessarily.
In Auto Import Export v. Adebayo & Ors (2005) LPELR-642(SC), the Supreme Court clarified that if the guarantor has already assumed the position of a principal debtor or expressly agreed to remain liable, the creditor’s release of the principal debtor does not discharge the guarantor:
“The creditor will not discharge a surety if he has ceased to be a surety and become himself a principal debtor, or has previously paid part of the debt and given a security for the remainder, or has expressly agreed to remain liable…”
— Per Sylvester Umaru Onu, JSC.
Key Takeaways
✅ A guarantor or surety assumes an independent and enforceable obligation to the creditor.
✅ The obligation crystallizes upon the debtor’s default — no need to first sue or demand from the debtor.
✅ The creditor may proceed directly against the guarantor, even if the debtor is absent or deceased.
✅ A release of the debtor does not always discharge the guarantor if the guarantor has assumed principal liability.
✅ The guarantor remains liable even when the creditor chooses not to pursue the debtor first.
Conclusion
Guaranteeing someone’s obligation is a serious commitment with significant legal consequences. Courts in Nigeria consistently enforce guarantees and suretyships strictly according to their terms.
If you are considering standing as a guarantor or surety, ensure you fully understand the nature of your obligation and seek legal advice before signing any document. Likewise, creditors can take comfort in knowing that the law permits them to enforce guarantees without undue procedural hurdles.
Disclaimer
This article is for general informational purposes only and does not constitute legal advice. While every effort has been made to ensure the accuracy of the information provided, readers are advised to consult a qualified legal practitioner for advice tailored to their specific circumstances. The author and publisher accept no responsibility for any loss or damage arising from reliance on the content of this post.
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