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 ?
In determining Litwin's motives for making and guaranteeing the loans, the court considered the taxpayer's age and the fact that the loan guarantee ultimately satisfied was actually a renewal of the guarantees after he sold a controlling interest in the business.
A simple solution because it's a withdrawal-based benefit, the Principal Plus Rider can help clients feel more confident about investing in the equity markets, allowing them to participate in up markets while guaranteeing their retirement income over the long-term.
Since email is the primary method of business communication today, guaranteeing email integrity is crucial during service interruptions, whether they are simple server outages or disasters such as those caused by Hurricane Isabel and the recent massive power outage that hit the Northeastern U.
The transaction was structured as two separate guarantees, one primarily guaranteeing the IRR through the lease-up phase of the properties and the other guaranteeing the IRR through the operating phase of the properties.
CEFO administers three types of guarantees, with all three guaranteeing 90-percent of a loan.
Sonics' SiliconBackplane MicroNetwork is an application-specific IP core that manages all communications between SOC subsystems while guaranteeing end-to-end performance and ensuring real-time quality of service.