What is a contract of guarantee?

A contract of guarantee is a legally binding agreement between two parties that a third party will be responsible for performing a certain action or fulfilling an obligation. A contract of guarantee is a form of security, often used in business and finance. In Nebraska, a contract of guarantee is created when one person or entity (the guarantor) agrees to be held responsible for the payment of a debt or performance of an obligation if the debtor or obligor defaults on the contract. The guarantor is typically a third-party individual, corporation, or other entity that is not a party to the original contract. A contract of guarantee could be used, for instance, when a business is applying for a loan and needs to provide collateral or security against the loan. In this case, the creditor (or lender) may require the business to offer a personal guarantee from the owner of the business or from a third-party guarantor who is willing to co-sign the loan. In Nebraska, a contract of guarantee must be in writing and must be signed by the guarantor in order to be considered legally binding. The guarantor should fully understand the terms of the contract and the potential risks involved before signing. It is also important for the guarantor to understand that they may be held liable if the debtor or obligor fails to fulfill their obligations as stated in the initial contract.

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