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 ?
Recently, there has been a trend toward loan guarantee programs over other programs that support the credit market.
It is plausible, therefore, that a more conditional loan guarantee program, available only to households hit by such shocks, might allow policymakers to provide the benefits from guarantees while limiting their cost.
The more than $136 million in USDA loan guarantees will help build more than 2,200 miles of electric lines, fund more than $5 million in smart-grid development and provide nearly $3 million to improve electric service for Native Americans.
While the taxpayers' acknowledged that their loan guarantees were indirect loans and that they were disqualified persons for purposes of Sec.
Loan Guarantee Programme offers financing for all commercial activities; except for non-profit ones.
The National Loan Guarantee Scheme will allow businesses to borrow money at a cheaper rate from banks who agree to take part.
Federal loan guarantees for the pipeline are $21 billion.
Insignia Athletics LLC, at 60 Fremont St., needs the HUD Section 108 Loan Guarantee to ensure it receives the necessary financing for its expansion and growth plans, which include retaining its 47 current employees, and creating a minimum of 35 full-time jobs.
Abengoa, an international company that applies innovative technology solutions for sustainable development in the energy and environment sectors, has financed a USD1.2bn loan guarantee with the Department of Energy.
Categories: July 12, 2010, American Recovery and Reinvestment Act (ARRA), DOE Loan Guarantee Program (LGP), Energy costs, Energy efficiency, Energy management, Energy planning, Loans, Performance measures, Program evaluation, Program management, Renewable energy sources
March 22 2010 - Darling International Inc has announced that the Department of Energy (DOE) has notified Darling and Valero Energy Corporation that their proposed joint venture project to build a renewable diesel facility has been selected by the Loan Guarantee Program Office (LGPO) for due diligence review.
NOT a single loan or loan guarantee has been made under the Government's automotive assistance programme, a report from MPs said today.