DISCHARGING A GUARANTEE

Abstract

This article discusses the Canadian case-law, including the recent decision of the Supreme Court of Canada in Pax Management Ltd. v. Canadian Imperial Bank of Commerce, as to when a creditor's conduct will discharge a surety. The article suggests a three-step analytical model that identifies the special equitable rules and the general principles of the law that operate to discharge sureties in whole or in part. One goal of the article is to reveal the operation of contract law principles that are often not perceived.