Can a guarantor contract out of their right to have the security realized for their benefit?
Ontario, Canada
The following excerpt is from RBC v. 164393, 2019 ONSC 5145 (CanLII):
Although, in the absence of contractual terms to the contrary, a creditor owes a duty to preserve and protect security, guarantors may contract out of their right to have the security realized for their benefit, provided clear and express language is used. The terms of a guarantee may preclude guarantors from arguing that a financial institution has not taken all commercially reasonable steps to enforce its security. (Bauer v. Bank of Montreal, 1980 CanLII 12 (SCC), [1980] 2 S.C.R. 102, 110 D.L.R. (3d) 424.)
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