Riverside California Continuing and Unconditional Guaranty of Business Indebtedness Including an Indemnity Agreement

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Multi-State
County:
Riverside
Control #:
US-01119BG
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Word; 
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Description

A guaranty is an undertaking on the part of one person (the guarantor) which binds the guarantor to performing the obligation of the debtor or obligor in the event of default by the debtor or obligor. The contract of guaranty may be absolute or it may be conditional. An absolute or unconditional guaranty is a contract by which the guarantor has promised that if the debtor does not perform the obligation or obligations, the guarantor will perform some act (such as the payment of money) to or for the benefit of the creditor.


A guaranty may be either continuing or restricted. The contract is restricted if it is limited to the guaranty of a single transaction or to a limited number of specific transactions and is not effective as to transactions other than those guaranteed. The contract is continuing if it contemplates a future course of dealing during an indefinite period, or if it is intended to cover a series of transactions or a succession of credits, or if its purpose is to give to the principal debtor a standing credit to be used by him or her from time to time.

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FAQ

An indemnity is a contract by one party to keep the other harmless against loss, but a contract of guarantee is a contract to answer for the debt, default or miscarriage of another who is to be primarily liable to the promisee .

As per Section 129 of the Indian Contract Act, 1972, a Guarantee that extends to a series and multitudes of transactions is known as a Continuing Guarantee in a contract. These guarantees have a set time limit and time frame or are for a fixed duration, maybe one month, one year, etc.

Definition of indemnity 1a : security against hurt, loss, or damage. b : exemption from incurred penalties or liabilities.

Lenders often insert continuing and unconditional guaranty language. This type of guaranty renders a guarantor liable for all past, present and future obligations of the business. The exposure is almost unlimited. The business may incur a mountain of debt and in the event of default the guarantor is ultimately liable.

Indemnities and guarantees are often confused. A guarantee is an agreement to meet someone else's agreement to do something usually to make a payment. An indemnity is an agreement to pay for a cost or reimburse a loss incurred by someone else.

Specific Guarantee: A specific guarantee is for a single debt or any specified transaction. It comes to an end when such debt has been paid. Continuing Guarantee: A continuing guarantee is a type of guarantee which applies to a series of transactions.

A continuing guarantee may at any time be revoked by the surety, as to future transactions, by notice to the creditor. Illustrations. (a) A, in consideration of B's discounting, at As request, bills of exchange for C, guarantees to B, for twelve months, the due payment of all such bills to the extent of 5,000 rupees.

This is an irrevocable, unconditional joint and several and continuing guaranty of the Indebtedness, and the liability of each Guarantor hereunder is absolute.

Specific Guarantee: A specific guarantee is for a single debt or any specified transaction. It comes to an end when such debt has been paid. Continuing Guarantee: A continuing guarantee is a type of guarantee which applies to a series of transactions.

A Guarantee is irrevocable, meaning that once issued it cannot be amended nor cancelled during its validity period without the consent of the parties, i.e. the Guarantor and/or the Beneficiary.

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Riverside California Continuing and Unconditional Guaranty of Business Indebtedness Including an Indemnity Agreement