Legal Memorandum: Breach of Contract of Guaranty in MN

Issue: What is necessary to establish a prima facie case of a contract of guaranty and its breach in Minnesota?

Area of Law: Business Organizations & Contracts, Litigation & Procedure
Keywords: Contract of guaranty; Collateral obligation
Jurisdiction: Minnesota
Cited Cases: 241 Minn. 267; 64 N.W.2d 517; 261 N.W.2d 586; 268 Minn. 284
Cited Statutes: None
Date: 06/01/2013

In Fidelity Bank and Trust Co., the Minnesota Supreme Court succinctly summarized the elements necessary to establish a case based on the breach of a contract of guaranty and the effect of establishing a prima facie case:

The elements of a prima facie case on a contract of guaranty are set out in Clark v. Otto B. Ashbach & Sons, Inc., 241 Minn. 267, 275, 64 N.W.2d 517, 522 (1954), as

(1) a primary obligation or undertaking,


(2) a collateral undertaking on the part of a guarantor,


(3) the default of the principal obligor.


Where a plaintiff proves a prima facie case and it is unrebutted by defendant, the plaintiff has met his burden of proof. Elk River Concrete Products Co. v. American Cas. Co., 268 Minn. 284, 129 N.W.2d 309 (1964).

Fidelity Bank and Trust Co. v. Fitzsimmons, 261 N.W.2d 586, 590 (Minn. 1977). 

The Minnesota Supreme Court has explained that a “collateral obligation” in this context means a separate contract that guarantees another party’s primary obligation:

A contract of guaranty, being a collateral engagement for the performance of an undertaking of another, imports the existence of two different obligations, one being that of the principal debtor and the other that of the guarantor. To constitute a guaranty, there must be a principal […]


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