Joyce's son, Al, borrowed money from Verity Finance. He lost his job last month and has not made the latest payment on the debt. When Verity's collections department telephones, Joyce answers the phone. She agrees to make the payments if Al does not because she is worried about his state of mind due to his job loss. Joyce's promise is called an indemnity.

Question

Quizplus · Accepted Answer

Joyce's promise is considered a guaranty because she is agreeing to fulfill the obligation if Al fails to do so, not an indemnity which would involve compensating for loss or damage.

Joyce's Son, Al, Borrowed Money from Verity Finance