Your friend needs a loan. One of the lender’s requirements is to provide a guarantor. He turns to you, and without hesitation, you agree. “It is just a signature, what could possibly go wrong?” you think.

Months pass. Your friend fails to repay the loan. The lender comes knocking on your door. You are astonished, “How? I was not the one who borrowed!” –You protest. Yes, you did not borrow, but by signing the contract of guarantee, you took liability for the loan. That mere formality you fulfilled comes to haunt you.

In order to understand what these contracts of guarantee are, we seek context in section 3(1) of the Law of Contract Act (Cap 23, Laws of Kenya). It provides that for one to be charged on a promise to pay a debt of another, there has to be a written agreement in place, signed by that person stating that they will pay the debt. These agreements are called contracts of guarantee.

According to The Law of Guarantees by Geraldine Andrews & Richard Millett (2^nd Edition, p. 156):

“A contract of guarantee is an accessory contract, by which the surety undertakes to ensure that the principal performs the principal obligations… The surety is therefore under a secondary obligation which is dependent upon the default of the principal and which does not arise until that point.”

Similarly, Halsbury’s Laws of England (4^th Edition Vol. 20, para 194, p. 124) explains:

“On the default of the principal debtor causing loss to the creditor, the guarantor is, apart from special stipulation, immediately liable to the full extent of his obligation…”

From these definitions, one thing is clear: A guarantor, in addition to backing the debtor, promises to pay the debt if the debtor defaults. It is a safety net for lenders as they will recover their amounts even if the debtor fails on their obligation.

A guarantor’s liability is secondary to that of the principal debtor. This means they are only liable if the borrower fails to pay. This position was affirmed in Maingi v Mwongera & another [2024] KEHC 16724 (KLR), where the court echoed the earlier holding in Ebony Development Company Ltd v Standard Chartered Bank Ltd [2008] eKLR:

“The obligation of the guarantor is clear. It becomes liable upon default by the principal debtor… It is not the guarantor’s role to see to it that the borrower complies with his contractual obligation, but to pay on demand the guaranteed sum.”

The High Court in Clesoi Holdings Limited v Prime Bank Limited [2020] eKLR summarised the legal principles surrounding guarantees:

1. A guarantee is a written promise by one person to take responsibility for another’s debt if they fail to pay.
2. The principal debtor remains primarily liable. The guarantor’s obligation is secondary, and arises only after default.
3. The principle of co-extensiveness applies:
4. The guarantor’s liability is generally equal to that of the principal debtor (unless the agreement states otherwise).
5. The guarantor’s liability is reduced or extinguished if the principal debt becomes void, illegal, discharged, or otherwise ceases to exist.

Conclusion

Agreeing to be a guarantor may feel like a simple favour. But legally, it is a binding commitment to pay another person’s debt if they fail to do so. Once the borrower defaults and the bank issues a demand, you are legally required to settle the loan, just like the borrower would have.

So, before you say, “It’s just a signature,” ask yourself: “Am I willing and able to pay this debt if things go wrong?”