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Simple English definitions for legal terms
special guaranty
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A quick definition of special guaranty:
A special guaranty is a promise made by one person to pay a debt or perform a duty if another person fails to do so. It is a type of contract that is usually used in finance and banking. The guaranty is collateral, which means it is a backup plan to protect the person who is owed money. It must be in writing and is addressed to a specific person or group of people who are the only ones who can enforce it.
A more thorough explanation:
A special guaranty is a type of guarantee in which the guarantor promises to pay or perform a duty in case the primary obligor fails to do so. It is a written agreement that is collateral to the primary obligation and is addressed to a particular person or group of persons who are the only ones who can enforce it.
- A father guarantees to pay his son's college tuition if the son is unable to do so. This is a special guaranty because it is addressed to the college and only they can enforce it.
- A business owner guarantees to pay a supplier for goods delivered to their company. This is a special guaranty because it is addressed to the supplier and only they can enforce it.
These examples illustrate how a special guaranty is a specific type of guarantee that is addressed to a particular person or group of persons. The guarantor is promising to pay or perform a duty if the primary obligor fails to do so, and only the person or group named in the agreement can enforce it.