Legal Definitions - cautioner

A cautioner, a term primarily used in Civil and Scots law, refers to an individual or entity who provides a guarantee or security to ensure that another person or entity fulfills a specific obligation. Essentially, a cautioner acts as a guarantor, promising to step in and meet the obligation if the primary party fails to do so.

Here are some examples illustrating the role of a cautioner:

• Business Loan Guarantee: Imagine a startup company, "InnovateTech," seeks a significant loan from a bank to develop a new product. Due to InnovateTech's limited operational history and assets, the bank is hesitant to approve the loan without additional security. The CEO's wealthy uncle, Mr. Henderson, agrees to act as a cautioner. He signs a personal guarantee, promising the bank that if InnovateTech defaults on its loan payments, he will personally be responsible for repaying the outstanding debt. In this scenario, Mr. Henderson is the cautioner because he has provided a personal security to ensure InnovateTech's obligation to repay the loan is met.

• Court Appearance Assurance: Consider a situation where a person, Sarah, is released from police custody pending her trial. The court requires assurance that Sarah will attend all her scheduled court hearings. Sarah's friend, Mark, steps forward and agrees to be a cautioner. He signs a legal undertaking with the court, pledging a specific sum of money or an asset that would be forfeited if Sarah fails to appear for her court dates as required. Mark is the cautioner because he has put up security to ensure Sarah's obligation to attend court is performed. If Sarah breaches this obligation, Mark's pledged security would be called upon.

• Rental Agreement Security: A university student, Liam, wants to rent an apartment but has no credit history or a steady income, making the landlord reluctant to approve his application. Liam's mother, Mrs. Davies, agrees to act as a cautioner for the lease. She signs a separate agreement with the landlord, promising to cover any unpaid rent or damages if Liam fails to meet his obligations under the tenancy agreement. Mrs. Davies is the cautioner by providing a financial guarantee to the landlord, ensuring that Liam's rental obligations (such as paying rent and covering damages) will be fulfilled, thereby reducing the landlord's risk.