CHAPTER 13.05. Revocation of a Guaranty

• Jurisdiction: United States

13.05. Revocation of a Guaranty

Prior to acceptance, a promise of guaranty is revocable like any other contract offer—upon effective notice to the offeree, which in a guaranty would be the obligee.³⁹ Once there is a validly formed contract, attempts at revocation generally constitute breach.⁴⁰

With respect to a continuing guaranty, each subsequent transaction operates as an offer to enter into a guaranty, the acceptance of which is typically the advance of money by the obligee to the primary obligor.⁴¹ Consequently, a guarantor may not effectively withdraw its guaranty with respect to those transactions that have already been accepted under the continuing guaranty.⁴² However, with respect to future advances (i.e., unaccepted offers to guaranty a greater underlying obligation), the guarantor may revoke the offer, thus limiting the scope of its liability.⁴³

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Notes:

^[39] See Danby, 104 A.2d 903, 906 (Del. 1954) (It is the "undoubted general rule that unless an offer of guaranty—or for that matter, any other offer—is supported by consideration, or until it has been accepted or acted upon, it may be withdrawn.").

^[40] See id.; Danby, 101 A.2d at 312; Ajax Rubber Co. v. Gam, 151 A. 831, 832 (Del. Super. Ct. 1924).

^[41] See Danby, 101 A.2d at 312.

^[42] See id.

^[43] See id.