Caution, in the Law of Scotland, like Guaranty (q.v.) in England, is an obligation undertaken by a second party, whereby he binds himself, failing the primary obligant, to fulfil his obligation, whether it be of a pecuniary nature or otherwise. Cautious obligations are thus essentially of an accessory nature, and cannot subsist apart from the principal obligation. The law of this subject is now largely founded on the Mercantile Law Amendment Acts, 1856, which assimilate the laws of England and Scotland, and according to which the creditor may proceed at once against the cautioner, just as if he were a joint obligant, without suing the primary debtor, unless the cautioner has expressly stipulated that this shall be done. The creditor, however, is in every case bound to use proper precaution in retaining and making available securities. He is not, however, bound to make the same full disclosure of material facts as in insurance, and therefore a cautioner should make careful inquiry for himself. Cautious obligations are generally gratuitous, being, for the most part, undertaken from motives of friendship; but it is by no means uncommon for them to be entered into in consideration of a premium paid by the person guaranteed, or by those interested in his fortunes. Where a premium is paid, the transaction becomes a mere insurance of solvency, honesty, or efficiency; and associations of great public utility (see GUARANTEE) have been formed, both in England and Scotland, for the purpose of undertaking to guarantee the fidelity of persons employed either in public or private offices of trust. The tendency of judicial decisions, both in England and Scotland, for many years past, has been to require greater strictness than formerly in the constitution of cautionary obligations; and under the statutes already mentioned all such engagements must be in writing, subscribed by the person undertaking or making them, or by some person duly authorised by him, otherwise they shall have no effect. If a cautionary obligation is dependent on a condition, it will, of course, be ineffectual unless the condition be complied with. The cautioner may, in general, plead every defence which was competent to the principal debtor, and the extinction of the primary obligation extinguishes the secondary one. The cautioner is discharged by any essential charge being made on the obligation of the debtor, or in respect of the person relied on, without his assent. The statute expressly provides that changes of partnership either of creditor or debtor will extinguish the guarantee. If the creditor gives time—e.g. takes bills from the debtor of an unusual currency—that will also operate discharge. The discharge of one cautioner, moreover, unless consented to by the rest, is a discharge to all. The cautioner is entitled, on full payment, though not on payment by a dividend, to an assignment of the debt and diligence, by which means he comes, in all respects, into the creditor's place; and moreover, if the solvency or other conditions of the principal debtor should seem precarious, he may adopt legal measures for his relief. Co-cautioners, or persons bound together, whether their obligations be embodied in one or several deeds, are entitled to mutual relief. But where a co-cautioner obtains relief from the others, he must communicate to them the benefit of any deduction or ease which may have been allowed him in paying the debt.
Letters of credit and recommendation raise much the same relation of parties as a formal cautionary obligation, but since 1856 a mere verbal introduction cannot have that effect. For the forms and effects of ordinary mercantile guarantees, and for the forms of guarantee insurance of fidelity, see GUARANTY. For the Scottish cautionary obligation in cash-credit bond, see BANKING, II. 713.
JUDICIAL CAUTION, in the Law of Scotland, is of two kinds—for appearance, and for payment. If a creditor makes oath before a magistrate, that he believes his debtor to be meditating flight (in meditatione fugæ), he may obtain a warrant for his apprehension; and should he succeed in proving the alleged intention to flee, he may compel him to find caution to abide the judgment of a court (judicio sisti). The cautioner, or surety, undertakes that the defender shall appear to answer any action that may be brought within six months. The old Bond of Presentation, by which in order to gain time the surety undertook to produce the debtor or pay the debt at a future date, is now superseded by the abolition of imprisonment for debt. There is also a form of judicial caution called judicatum solvi, given in cases of general loosing of arrestment of ships, in which the surety becomes liable for the whole debt. The commonest form of judicial caution, however, is the security usually given in the Bill Chamber (q.v.), when a bill or bond is brought under suspension; the security is for the principal sum and expenses, if the suspension should be refused. Interdict is also frequently granted upon caution for the damages that may result from the interdict, should it turn out to have been wrongly obtained.