HopefullyInLawSchool
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Simple English definitions for legal terms
continuing guaranty
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A quick definition of continuing guaranty:
A continuing guaranty is a promise made by someone to pay a debt or perform a duty if another person fails to do so. This type of guaranty applies to a series of transactions or an ongoing relationship, rather than just one specific instance. It is important to have this promise in writing and it is usually used in finance and banking contexts.
A more thorough explanation:
A continuing guaranty is a type of guarantee in which a person promises to pay a debt or perform a duty if another person fails to do so. This type of guarantee applies to a course of dealing for an indefinite time or by a succession of credits.
- John guarantees to pay all of the debts that his friend Tom incurs with a particular credit card company. This is a continuing guaranty because it applies to a succession of credits.
- Samantha guarantees to pay the rent for her sister's apartment for the next year. This is also a continuing guaranty because it applies to an indefinite time period.
These examples illustrate how a continuing guaranty can be used to provide ongoing financial support for another person. The guarantor is responsible for paying the debt or performing the duty if the primary obligor fails to do so. This type of guarantee is often used in business and financial contexts.