Caution

Caution, a term in Scots law equivalent to "Guarantee "in England, whereby a third party to any contract undertakes to fulfil the obligations of the second party (the obligee). On this subject the law of England and Scotland has been amalgamated by the "Mercantile Law Amendment Act" passed in the year 1856, and under which a creditor is entitled to proceed at once against the cautioner as if he were a joint obligant, and without suing the principal obligor or debtor. The cautioner is at liberty to set up any defence which was competent to the principal debtor. The cautioner in the event of any important change in the debtor's obligation, made without his (the cautioner's) assent, is discharged. Changes of partnership, either of creditor or debtor, have the effect of cancelling the guarantee; so also will time given to the debtor without the cautioner's consent; and the discharge of one cautioner (if there be several), without consent of the others, operates as a discharge to all. The cautioner on full payment of the debt is entitled to an assignment of the same, with all securities therefor in the hands of the creditor, and, in fact, takes his place against the original debtor or obligor.