guaranty

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guaranty

a person who acts as a guarantor
Collins Discovery Encyclopedia, 1st edition © HarperCollins Publishers 2005
The following article is from The Great Soviet Encyclopedia (1979). It might be outdated or ideologically biased.

Guaranty

 

in civil law an obligation, based on law or on contract, by which a natural or juridical person is fully or partially liable to a creditor in the case of nonfulfillment or improper fulfillment of an obligation by a debtor.

In Soviet law, guaranty is an independent measure to safeguard the fulfillment of obligations by socialist organizations. A legal form like the guaranty is necessary because other means of securing obligations, such as a forfeit fixed by the contract, a pawn, earnest money, and suretyship, cannot be used for certain obligations, in particular, obligations resulting from a bank loan contract.

The content of the guaranty obligation consists of the right of the bank to have its loan to the debtor organization paid off by the bank’s special order in nondisputable proceedings, either by writing off the sum from the account of the guarantor organization or by recovery from assets belonging to the latter. A subsidiary (not joint but supplementary) liability of the guarantor originates through the guaranty. The guarantor is obligated to fulfill the obligation in place of the debtor only when the latter has failed to satisfy the claim of the creditor. The extent of the guarantor’s liability is usually limited to the amount of payment missed by the debtor organization on the day when the claim of redemption of the loan is presented.

The guaranty may secure an actual or a potential claim of the creditor toward the debtor; it is used as a means of securing the fulfillment of the obligation and as a credit sanction.

E. G. POLONSKII

The Great Soviet Encyclopedia, 3rd Edition (1970-1979). © 2010 The Gale Group, Inc. All rights reserved.
References in periodicals archive ?
As discussed in our article Permanent Loans & Other Oxymora (April 30, 2015), non-recourse permanent loans (Fannie Mae, Freddie Mac, CMBS, etc.) include "bad boy" carve-out guaranties that somewhat limit guarantors' liability This limited guaranty (sometimes referred to as a springing guaranty) has expanded of late to include non-egregious liability triggers that were historically seen in only conventional recourse loans.
However, under current law, property-casualty (multi-line) insurers may write financial guaranties. Under the proposed regulation, financial guaranties, when issued by multi-line insurers, can be written only against 'surplus' surplus--surplus not otherwise needed to support these insurers' traditional property-casualty insurance writings."
The court continued by noting that the guaranties at issue were special, as opposed to general guaranties.
In re Earth Lite, Inc., secured guaranties from insiders may be adequate protection.
Although beyond the scope of this article, it is also worth noting that the decision may well have an impact reaching beyond guaranties to impact any contract provision which is contingent on the absence of a default historically.
As would be expected, the preponderance of guaranties are issued by persons or entities related to the tenant.
As the real estate industry continues to suffer, it has become more and more common for lenders to seek payment under these interest guaranties for interest accruing both before and after the stated maturity of -- and after a default with respect to -- the underlying loan.