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 ?
Guaranteed funding does not expand eligibility for VA health care, current benefits, or the VA's mission.
More coordination among both the guaranteed funds and the states would be helpful, but an industry-sponsored emergency fund-with strong capital requirements-is probably the healthiest answer.
Iraq or no Iraq, tens of thousands of shipments still leave American ports unexamined, guaranteed by public money.
CNA had a new lineup of nonguaranteed products ready by December, but Miller said the guaranteed products are still more popular this year, even though they are about 10% to 20% more expensive than last year's guaranteed products.
Guaranteed Income for Life - Prudential IncomeFlex offers a guaranteed yearly paycheck for life, even if the participant's account balance becomes depleted.
It is ironic that while many legitimate family farms in California cannot get access to credit, that the FmHA has not been able to utilize its entire guaranteed credit allocation for the past six years.
The Guaranteed Notes are secured by a Funding Agreement provided by the Metropolitan Life Insurance Company (MetLife).
A rebate program providing enrolled patients with a price guaranteed for life.
If you are invested in any of the funds at the time of maturity, you are guaranteed to receive the highest value the fund ever achieved (the GMUV), regardless of the current market value or when you invested in the fund," said Scott Sleyster, executive vice president, Prudential Retirement.
In general, guaranteed payments for capital are not treated as part of a sale.
45 billion of RJR guaranteed secured notes (RJR notes) for RAI exchange notes.
To keep the business going, Litwin made several loans to the corporation and guaranteed loans from banks that totaled over $1.