Contingent Guarantee

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Contingent Guarantee

A guarantee made by a third party to the buyer of a good or service stating that the seller will receive payment on time and in the correct amount. If the buyer fails to make the payment, the third party will make payment on his/her behalf. Contingent guarantees, known as letters of credit, have become very common in international commerce, as distance and other factors make it difficult for sellers to establish the credit worthiness of every buyer. See also: Co-signer.
References in periodicals archive ?
Mr Truell told The Times the plan would need the backing of the Treasury, as the taxpayer would act as the guarantor, and it would also need contingent guarantees from Tata Steel to stand behind the scheme and the support of the Pensions Regulator.
Afreximbank creates contingent guarantees for projects, and once they are completed the bank agrees to refinance the construction financing partners and provides extra capital for furniture, fittings and pre-operating working capital.
For TGN, the existence of creditworthy owners is crucial given the contingent guarantees provided by TransCanada and other sponsors under the certificates to the IFC.
5 million and cancellation of all contingent guarantees provided by Peerless.