LIMITED GUARANTY Meaning and
Definition
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A limited guaranty is a legal agreement in which one party, known as the guarantor, agrees to assume responsibility for the performance or fulfillment of a contractual obligation of another party, known as the borrower or the debtor. This contractual obligation may involve the repayment of a loan, the fulfillment of a contractual or financial obligation, or the performance of a specific task.
The term "limited" in limited guaranty implies that there are certain restrictions or limitations on the liability of the guarantor. These limitations are typically defined within the terms of the agreement and may include a cap on the amount of financial obligation the guarantor is responsible for, a specific time period in which the guaranty is valid, or specific conditions under which the guaranty can be invoked.
The purpose of a limited guaranty is to provide a level of security or assurance to the lender or creditor, allowing them to have additional confidence in the ability of the borrower to fulfill their obligations. In the event that the borrower defaults on their obligations, the limited guarantor becomes legally obligated to fulfill the outstanding obligations to the extent specified in the agreement.
It is important to note that a limited guaranty is a legally binding agreement, and both parties should carefully review and understand the terms and conditions before entering into such an arrangement. Seek professional advice or consult legal counsel to ensure a complete understanding of the obligations and liabilities associated with a limited guaranty.
Common Misspellings for LIMITED GUARANTY
- kimited guaranty
- pimited guaranty
- oimited guaranty
- lumited guaranty
- ljmited guaranty
- lkmited guaranty
- lomited guaranty
- l9mited guaranty
- l8mited guaranty
- linited guaranty
- likited guaranty
- lijited guaranty
- limuted guaranty
- limjted guaranty
- limkted guaranty
- limoted guaranty
- lim9ted guaranty
- lim8ted guaranty
- limired guaranty
- limifed guaranty
Etymology of LIMITED GUARANTY
The word "limited" is derived from the Latin word "limitare", meaning "to bound" or "to set a boundary". It entered English in the 14th century and has retained a similar meaning since then.
The word "guaranty" is derived from the Old French word "garantie", meaning "warranty" or "protection". It originated from the Old High German word "warant", meaning "aureate" or "caution". The term has been used in English since the 16th century.
Combining these two terms, the phrase "limited guaranty" refers to a legally binding agreement that sets boundaries or limitations on a warranty or protection provided by one party to another.
