Birkmyr v Darnell

Facts

• The plaintiff was asked to lend a horse to a third party.
• The defendant orally promised the plaintiff that if he did so, the defendant would see the horse restored, or would answer for it.
• The plaintiff lent the horse on the strength of that promise.
• The third party did not return the horse.
• The plaintiff sued the defendant on his promise.

Issue

1. Whether the defendant's promise was a guarantee, presupposing the continuing liability of the third party, or an original independent undertaking making the defendant primarily liable.

Held

• Holt CJ drew the distinction that has governed ever since. Where the promisor says "I will see you paid" or "he shall pay you and if he does not I will," the third party remains liable and the promise is collateral, that is a guarantee. Where the promisor says "let him have the goods, I will be your paymaster," the promisor undertakes primary liability, the third party is not liable at all, and the promise is an original undertaking, not a guarantee.

Ratio Decidendi

The character of a promise to answer for another depends on whether the third party remains liable. If he does, the promise is accessory and is a contract of guarantee. If the promisor displaces the third party's liability and assumes it himself, the promise is original and the law of guarantee does not apply.