A guarantee is an agreement to repay the obligations of another upon that others default. It is a form of assurance or security provided to a creditor that their debt will be repaid even if the debtor themselves cannot fulfill their obligations. The guarantor takes responsibility for the repayment of the debt if the primary debtor defaults on the loan.

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A Guarantee Is

Question 38

Multiple Choice

A guarantee is

A) a contract that allows fluctuating debt to be incurred without the provision of additional security.
B) an agreement to repay the obligations of another upon that others default.
C) a contract that has a principal debtor liable for the primary debt and a subsidiary debtor liable for any additional indebtedness.
D) a contract that has a single creditor but more than one primary debtor.
E) a series of transactions between a creditor and its principal debtor that result in a primary debt and contingent liability.

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