guarantee

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Guarantee

One to whom a guaranty is made. This word is also used, as a noun, to denote the contract of guaranty or the obligation of a guarantor, and, as a verb, to denote the action of assuming the responsibilities of a guarantor.

guarantee

1) v. to pledge or agree to be responsible for another's debt or contractual performance if that other person does not pay or perform. Usually, the party receiving the guarantee will first try to collect or obtain performance from the debtor before trying to collect from the one making the guarantee (guarantor). 2) the promise to pay another's debt or fulfill contract obligations if that party fails to pay or perform. 3) n. occasionally, the person to whom the guarantee is made. 4) a promise to make a product good if it has some defect. (See: guarantor)

guarantee

a collateral promise to answer for the debt or obligation of another. A guarantee is a secondary obligation, becoming operative only where the principal debtor is in default; because it is a secondary obligation, should the primary obligation be unlawful or invalid or unenforceable, the guarantor or surety cannot be compelled to make payment under the guarantee. A guarantee should be distinguished from an indemnity, which is a primary obligation to compensate the loss of another; in the latter case the unenforceability of the principal debt will not render the indemnity unenforceable. In Scotland, the same relationship is regulated by the institution of caution (pronounced ‘cayshun’). Proper caution is the term used where the cautioner is expressly bound as guarantor to the creditor. The term improper caution is used when the cautioner is bound as a co-obligant with the principal debtor jointly and severally to the creditor.

The term is used colloquially in the UK for a statement by a manufacturer of goods that it will undertake some responsibility such as repair or replacement.

GUARANTEE, contracts. He lo whom a guaranty is made.
     2. The guarantee is entitled to receive payment, in the first place, from the debtor, and, secondly, from the guarantor. He must be careful not to give time beyond that stipulated in the original agreement, to the debtor, without the consent of the guarantor; the guarantee should, at the instance of the guarantor, bring an action against the principal for the recovery of the debt. 2 Johns. Oh. R. 554; 17 Johns. R. 384; 8 Serg. & Rawle, 116; 10 Serg. & Rawle, 33; 2 Bro. C. C. 579, 582; 2 Ves. jr. 542. But the mere omission of the guarantee to sue the principal debtor will not, in general, discharge the guarantor. 8 Serg. & Rawle, 112; 3 Yeates, R. 157; 6 Binn. R. 292, 300.

References in periodicals archive ?
The surge in loan guarantee programs prompts the question: Are loan guarantees the best way to provide benefits to targeted borrowers or to channel additional resources to targeted sectors?
We now introduce a publicly funded (via taxes that, in this section, will remain unmodeled) loan guarantee into this model economy.
The Tax Court held that the loan guarantees were Sec.
The loan guarantee will be used for credit enhancement to secure a portion of the debt service on a $975,000 line of credit provided by Farmington Bank.
The loan guarantee is for constructing the Mojave Solar Project.
DOE has linked the LGP to two departmentwide performance goals, namely to (1) double renewable energy generating capacity by 2012 and (2) commit conditionally to loan guarantees for two nuclear power facilities to add a specified minimum amount of capacity in 2010.
Accordingly, Darling and Valero will engage in communications with the LGPO regarding detailed due diligence, the negotiation of terms and conditions of a potential loan guarantee and all other issues necessary for the LGPO to consider the issuance of a conditional commitment and, potentially, a loan guarantee.
The pounds 2.3 billion package of loan guarantees to UK car makers and large suppliers was announced in January, but "little progress has been made in releasing funds through this scheme," said a report today from the House of Commons Business Innovation and Skills Committee.
A GOVERNMENT aid scheme for the recession-battered motor industry which has failed to produce a single loan or loan guarantee was attacked by MPs today as a "wasted opportunity".
USDA considering request for advanced biodiesel plant: USDA is reviewing a request for a $25 million loan guarantee to retrofit a biodiesel plant to produce second-generation biofuels.
Under its powers to control government spending on large industrial investments, Brussels has accepted a Euro 2.4 billion 100% loan guarantee from the public shareholders of Flughafen Berlin Schonefeld GmbH.
The campaign wants a loan or loan guarantee, in the range of pounds 500m to pounds 1bn, and would anyway be repaid at commercial rates within a year to 18 months.