Write notes on the following: (i) Fidelity Guarantee

A guarantee, guaranteeing by employer against the misconduct of an employee or to answer for the debt or default of another, is called a "fidelity guarantee". A surety's liability for the faithful discharge of another of his duties depends in each case on the exact terms of the guarantee. The surety is not discharged from the liability for the principal debtor's default because the default would not have happened if the creditor had used all the powers of superintending the performance of the debtor's duty which he could have exercised, because the employer of the servant whose due performance of work is guaranteed does not contract with the surety that he will use the utmost diligence in checking the servant's work. If the employer of a servant whose fidelity has been guaranteed continues to employ him even after a proved fact of dishonesty without notice to the guarantor, the surety is discharged. That is a basic principle implicit in the very nature of a fidelity guarantee. The guarantor in such a case guarantees the fidelity and ensures the loss against the risk of infidelity. If the employer wants to continue a dishonest servant after his dishonesty has been proved then he must give the guarantor notice of the fact of infidelity so that the guarantor may get an opportunity to say whether he would continue his guarantee or not for a man whose infidelity has been proved.