Act 1872 the liability of the surety is, unless otherwise provided by

contract, coextensive with that of the principal. Where the liability of the surety is _less_ extensive in amount than that of the principal debtor, difficult questions have arisen in England and America as to whether the surety is liable only for _part_ of the debt equal to the limit of his liability, or, up to such limit, for the _whole_ debt (_Ellis_ v. _Emmanuel_, 1 Ex. Div. 157; _Hobson_ v. _Bass_, 6 Ch. App. 792; Brandt, _Suretyship_, sec. 219). The surety cannot be made liable except for a loss sustained by reason of the default guaranteed against. Moreover, in the case of a joint and several guarantee by several sureties, unless all sign it none are liable thereunder (_National Pro. Bk. of England_ v. _Brackenbury_, 1906, 22 _Times_ L.R. 797). It was formerly considered in England to be the duty of the party taking a guarantee to see that it was couched in language enabling the party giving it to understand clearly to what extent he was binding himself (_Nicholson_ v. _Paget_, 1 C. & M. 48, 52). This view, however, can no longer be sustained, it being now recognized that a guarantee, like any other contract, must, in cases of ambiguity, be construed against the party bound thereby and in favour of the party receiving it (_Mayer_ v. _Isaac_, 6 M. & W. 605, 612; _Wood_ v. _Priestner_, L.R. 2 Exch. 66, 71). The surety is not to be changed beyond the limits prescribed by his contract, which must be construed so as to give effect to what may fairly be inferred to have been the intention of the parties, from what they themselves have expressed in writing. In cases of doubtful import, recourse to parol evidence is permissible, to explain, but not to contradict, the written evidence of the guarantee. As a general rule, the surety is not liable if the principal debt cannot be enforced, because, as already explained, the obligation of the surety is merely accessory to that of the principal debtor. It has never been actually decided in England whether this rule holds good in cases where the principal debtor is an infant, and on that account is not liable to the creditor. Probably in such a case the surety might be held liable by estoppel (see _Kimball_ v. _Newell_, 7 Hill (N.Y.) 116). When directors guarantee the performance by their company of a contract which is ultra vires, and therefore not binding on the latter, the directors' suretyship liability is, nevertheless, enforceable against them (_Yorkshire Railway Waggon Co._ v. _Maclure_, 21 Ch. D. 309 C.A.).

It is not always easy to determine for how long a time liability under a guarantee endures. Sometimes a guarantee is limited to a single transaction, and is obviously intended to be security against one specific default only. On the other hand, it as often happens that it is not exhausted by one transaction on the faith of it, but extends to a series of transactions, and remains a standing security until it is revoked, either by the act of the parties or else by the death of the surety. It is then termed a continuing guarantee. No fixed rules of interpretation determine whether a guarantee is a continuing one or not, but each case must be judged on its individual merits; and frequently, in order to achieve a correct construction, it becomes necessary to examine the surrounding circumstances, which often reveal what was the subject-matter which the parties contemplated when the guarantee was given, and likewise what was the scope and object of the transaction between them. Most continuing guarantees are either ordinary mercantile securities, in respect of advances made or goods supplied to the principal debtor or else bonds for the good behaviour of persons in public or private offices or employments. With regard to the latter class of continuing guarantees, the surety's liability is, generally speaking, revoked by any change in the constitution of the persons to or for whom the guarantee is given. On this subject it is now provided by section 18 of the Partnership Act 1890, which applies to Scotland as well as England, that "a continuing guarantee or cautionary obligation given either to a firm or to a third person in respect of the transactions of a firm, is, in the absence of agreement to the contrary, revoked as to future transactions by any change in the constitution of the firm to which, or of the firm in respect of the transactions of which the guaranty or obligation was given." This section, like the enactment it replaces, namely, sec. 4 of the Mercantile Law Amendment