What does Guaranty Agreement mean? Read on to discover the definition & meaning of the term Guaranty Agreement - to help you better understand the language used in insurance policies.
A two-party contract in which the first party agrees to perform in the event that a second party fails to perform. Unlike a surety, a guarantor is only required to perform after the obligee has made every reasonable and legal effort to force the principal's performance. Another difference is that technically the guaranty agreement is a two-party agreement between the guarantor and the obligee, which is separate from the agreement between the obligee and the principal. A guaranty contract provides the obligee with an alternative to a surety agreement to guarantee or ensure the successful performance of a promise.
We hope the you have a better understanding of the meaning of Guaranty Agreement.