Also found in: Dictionary, Thesaurus, Financial, Acronyms, Idioms, Encyclopedia, Wikipedia.
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.
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)
guaranteea 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.