guarantee

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Guarantee

The assumption of responsibility for payment of a debt or performance of some obligation if the liable party fails to perform to expectations.

Guarantee

A promise made by a third party to provide payment on a bond, loan, or other liability in the event of default. While many guarantees apply to debt instruments, they may also be used in day-to-day life. For example, a parent may sign a guarantee with a rental agency promising to pay rent on behalf of an adult child if he/she does not do it. Banks often make guarantees on behalf of certain clients, but, just as often, private parties make guarantees to banks to promise payment on private loans. Guarantees reduce the risk to loans and liabilities, and usually improve the credit agency ratings of bonds.

guarantee

or

warranty

a legally binding promise by the seller of a product to the purchaser that in the event of the product failing to work properly the seller will either replace or repair it free of charge, or refund the purchase price. Guarantees and warranties usually operate for a limited time-period from the date of purchase, though some products like cars may relate guarantee conditions to both time and mileage. Guarantees and warranties are an important means of promoting a product, in so far as they assure the buyer about the product's expected QUALITY and reliability. See CUSTOMER SERVICE, MARKETING MIX.

guarantee

see QUALITY.

guarantee

The act itself,or also the document,whereby one agrees to pay a debt if the principal obligor does not. Under common law, creditors had to exhaust their remedies against a debtor before pursuing a guarantor.Today, almost all guarantee instruments contain clauses allowing the creditor to seek payment directly from the guarantor if there has been a default by the debtor. Guarantee agreements must be in writing to be enforceable.Usually,there must be some consideration passing to the guarantor unless the instrument creating the obligation (note, lease) is signed at the same time as the guarantee,in which case the law assumes the guarantor has some interest in the transaction.

References in periodicals archive ?
She said: "DOE claims that the loan guarantee terms and credit subsidy fee estimates are confidential and may only be viewed by Georgia Power and its utility partners.
If Insignia Athletics is unable to pay the outstanding balance on the line of credit, the city will cover the amount of unpaid credit in full, up to $877,500, at which time the loan guarantee will become a Section 108 loan.
The deal is due to be closed by Friday, by which time the DOE must close all pending renewable-energy loan guarantees.
According to the DOE, loan guarantees will enable the Department to share some of the financial risks of projects that employ emerging or significantly improved energy technologies that avoid, reduce, or sequester air pollutants and greenhouse gases.
The court found that Maloof's personal loan guarantee, his pledge of stock and the bank's control of Level Propane did not constitute an economic outlay to create basis.
Governor Kohn will serve as chairman of the Air Transportation Stabilization Board, the Emergency Steel Loan Guarantee Board, and the Emergency Oil and Gas Loan Guarantee Board, and as a member of the LOCAL Television Loan Guarantee Board.
The loan guarantee, worth approximately USD130m, is the US Eximbank's first transaction with the airline.
2821), strengthens the 7(a) loan guarantee program by maintaining current fees and eliminating the need for federal subsidies, saving taxpayers between $70 million and $80 million.
The ATSB carefully evaluates the economic impacts of September 11 on each applicant firm, but poor pre-September 11 economic and financial performance is not rewarded with a loan guarantee.
Under the 7(a) loan guarantee program, in most cases, up to 75% of a small business loan, or up to $75,000, is guaranteed by the government to a bank or other commercial lender: The SBA's LowDoc and SBAExpress loans are for those firms that need cash fast and have little time for documentation.
The move follows the creation of a 20 trillion yen public loan guarantee system last October to alleviate the credit crunch that has made it difficult for many small and midsize companies to raise funds through bank loans, they said.
Congress will agree to any kind of loan guarantee program for either Mexico or any other "submerging" market.