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 ?
and Eitan Gerstner (1999), Selling with "Satisfaction Guaranteed", Journal of Service Research, 1 (4), 313-323.
"We got a lot accomplished, but there's still much work to do lit support of guaranteed VA health care funding and concurrent receipt.
Regarding guaranteed funds, I raise a big red caution flag.
However, there is no reference in either the Civil Code or the Commercial Code as to a limit on the guaranteed amount.
Now let's assume that the couple purchased a $100,000 annuity contract with a lifetime guaranteed withdrawal benefit, an optional rider available for a charge in addition to the basic annuity cost, that provides a guaranteed 5% annual growth of the withdrawal value for 10 years.
Whether immediate or deferred, fixed annuities are guaranteed by the companies issuing them.
Several parties guaranteed the loan but only Forsythe was an owner of the LLC.
Among the federal programs that receive mandatory or guaranteed funding are food stamps, Medicare, Medicaid administration, and VA compensation and pensions.
Among recent developments is Guaranteed Return Plus, a rider that combines exchange-traded funds with a guaranteed minimum accumulation benefit.
These requirements are often a trap for the innocent taxpayer who has guaranteed a loan for a family member or friend and is now repaying the bank without an offsetting tax deduction.
Taxpayers generally may not increase the basis in their S corporation stock by the amount of a loan guaranty to S corporation creditors until they make an actual "economic outlay." In a recent case the court considered whether an S corporation shareholder could include the amount of the guaranteed debt in his stock basis.

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