This section is from the book "Elementary Banking", by John Franklin Ebersole. Also available from Amazon: Elementary Banking.
A contract of suretyship is an agreement in which one person agrees to answer for the debt, default, or miscarriage of another. A contract of guaranty is a promise to pay such debt, etc., if the party first liable to pay or perform fails to do so. Under a contract of guaranty the guarantee (the person to whom it is given) must try to get the principal to pay or perform and use reasonable diligence to get him to do so; in a contract of suretyship the surety (the person making the contract) is liable absolutely if the principal does not pay or perform, and the creditor does not have to make any demand of the principal, but can at once proceed against the surety. But in many of their features both guaranty and suretyship contracts are alike. The offer to become a surety or guarantor must be accepted; acting on the offer is usually considered a sufficient acceptance. It must be in writing. In general, all the elements required in other contracts must be present. No particular form is required. The person to whom the contract is given must disclose all material facts within his knowledge that might affect the risk that is taken by the guarantor or surety. If the principal defaults no notice need be given to a surety to render him liable; but a guarantor must be given notice: (1) When the contract states that it is to be given; (2) when the surety would be damaged if not given notice; (3) if the amount for which the surety is bound is indefinite; (4) if the guaranty is conditional. If the guarantor or surety pays the debt he has a right to any claims the creditor may have; thus, if the creditor had the principal's promissory note or a mortgage he would be required to deliver such instrument to the person who has paid the debt. This is termed the right of subrogation. If there are two or more joint guarantors or sureties and one pays the entire debt he can make the others pay their share. This is the right of contribution. He who pays the debt is entitled to reimbursement.