Guarantee
What is a guarantee?
A guarantee is a contract whereby the guarantor undertakes to the creditor to ensure that the obligation is fulfilled. This contract gives rise to personal liability on the part of the guarantor. For protective purposes, a guarantee must be in writing, and the creditor is also subject to certain duties of care and disclosure, particularly regarding the financial circumstances of the principal debtor, in order to protect the guarantor. The guarantee is accessory to the principal debt. A guarantee is, in principle, subsidiary, i.e. the guarantor is only liable in the event that the principal debtor fails to perform. Where the guarantor is liable both as guarantor and as payer, the guarantor is jointly and severally liable alongside the principal debtor and may therefore, at the creditor’s discretion, even be called upon to pay before the principal debtor.
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