The giver of a guarantee is called "the surety," or "the guarantor"; the person to whom it is given "the creditor," or "the guarantee"; while the person whose payment or performance is secured thereby is termed "the principal debtor," or simply "the principal." In America, but not apparently elsewhere, there is a recognized distinction between "a surety" and "a guarantor"; the former being usually bound with the principal, at the same time and on the same consideration, while the contract of the latter is his own separate undertaking, in which the principal does not join, and in respect of which he is not to be held liable, until due diligence has been exerted to compel the principal debtor to make good his default. There is no privity of contract between the surety and the principal debtor, for the surety contracts with the creditor, and they do not constitute in law one person, and are not jointly liable to the creditor (_per_ Baron Parke in _Bain_ v. _Cooper_, 1 Dowl. R. (N.S.) 11, 14). No special phraseology is necessary to the formation of a guarantee; and what really distinguishes such a contract from one of insurance is not any essential difference between the two forms of words _insurance_ and _guarantee_, but the substance of the contract entered into by the parties in each particular case (_per_ Romer, L.J., in _Seaton_ v. _Heath_--_Seaton_ v. _Burnand_, 1899, 1 Q.B. 782, 792, C.A.; _per_ Vaughan Williams, L.J., in _In re Denton's Estate Licenses Insurance Corporation and Guarantee Fund Ltd._ v. _Denton_, 1904, 2 Ch., at p. 188; and see _Dane_ v. _Mortgage Insurance Corporation_, 1894, 1 Q.B. 54 C.A.) In this connexion it may be mentioned that the different kinds of suretyships have been classified as follows: (1) Those in which there is an agreement to constitute, for a particular purpose, the relation of principal and surety, to which agreement the creditor thereby secured is a party; (2) those in which there is a similar agreement between the principal and surety only, to which the creditor is a stranger; and (3) those in which, without any such contract of suretyship, there is a primary and a secondary liability of two persons for one and the same debt, the debt being, as between the two, that of one of those persons only, and not equally of both, so that the other, if he should be compelled to pay it, would be entitled to reimbursement from the person by whom (as between the two) it ought to have been paid (_per_ Earl of Selborne, L.C., _in Duncan Fox and Co._ v. _North and South Wales Bank_, 6 App. Cas., at p. 11). According to several codes civil sureties are made divisible into conventional, legal and judicial (Fr. and Bel., 2015, 2040 et seq.; Spain, 1823; Lower Canada, 1930), while the Spanish code further divides them into gratuitous and for valuable consideration (art. 1, 823).