A continuing guarantee
A) allows a breaching party to pay an amount specified in a contract, rather than facing a lawsuit for damages.
B) allows a creditor to advance further funds without affecting the obligation of the guarantor to pay in the event of default.
C) is a written commitment not to pursue a legal claim against another.
D) is an equitable principle assuring that when security is repossessed, there will be a period of time during which the debtor can still make payment.
E) is a primary obligation of a third party to pay a debt along with a debtor.

Question

Quizplus · Accepted Answer

A continuing guarantee is a guarantee that extends beyond a single transaction or occurrence and guarantees the obligation of the principal debtor for future transactions or obligations. It allows a creditor to advance further funds to the debtor without affecting the obligation of the guarantor to pay in the event of default. Option A is referring to liquidated damages, not a guarantee. Option C refers to a release or waiver, not a guarantee. Option D refers to a redemption period, not a guarantee. Option E refers to a joint and several liability, not a guarantee.

A Continuing Guarantee