Financial Guarantee
/ˌfaɪnænʃəl ˌɡærənˈtiː/
Definitions
- (n.) A contractual promise whereby a guarantor agrees to fulfill the financial obligation of a debtor if the debtor defaults.
The bank provided a financial guarantee to secure the loan repayment.
Forms
- financial guarantees
Related terms
See also
Commentary
Often used in lending and credit arrangements, financial guarantees mitigate risk by assuring payment; drafters should clearly specify the extent and triggers of the guarantor's liability.
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