Ace the Canadian Hospitality Law Challenge 2025 – Serve Up Success in Style!

A guarantee of another's debt is a specific type of contract where the guarantor agrees to take responsibility for the debt obligations of another individual or entity. In this arrangement, the guarantor acts as a primary surety, meaning they are directly obligated to fulfill the debt if the principal debtor defaults. This ensures that the creditor has additional security, as the guarantor is legally bound to pay if the primary obligor does not.

This relationship is critical in lending and credit situations, as it provides the lender with a further layer of assurance that debts will be settled. The guarantor steps in as a reliable source for repayment, thereby encouraging creditors to extend credit to individuals who may not have strong financial backing on their own.

In contrast, the other options listed refer to contracts that do not specifically involve the same level of responsibility or security typically associated with a guarantee of another's debt. Domestic contracts can encompass a wide variety of agreements related to personal or family matters, but do not inherently require a guarantor. Sales contracts and lease agreements also do not necessitate a primary surety in the same way; they focus on the transfer of goods or property rights and typically involve direct obligations between the buyer and seller or lessor and lessee. Therefore, the correct