Clause of the week
"For good consideration, and as an inducement for Creditor, from time to time to extend credit to Consumer, it is hereby agreed that the undersigned Guarantor does hereby guaranty to Creditor the prompt, punctual and full payment of all monies now, or hereinafter, due Creditor from Customer. Until termination, this guaranty is unlimited as to amount or duration and shall remain in full force and effect notwithstanding any extension, compromise, adjustment, forbearance, waiver, release or discharge of any party obligor or guarantor. The guaranty hereunder shall be unconditional and absolute. "
This clause specifies that a third party (guarantor) will guarantee the performance of a contract by one of the parties. It provides an assurance of performance and another "target" for damages if the contract is breached.
These clauses are an attempt to assure one contracting party that a third party will perform in case the other primary contracting party defaults or breaches an agreement. It acts as a sense of security in that a third party (the guarantor) will guarantee performance. These clauses are often common when a corporation enters into a contract to render performance and the other contracting party will demand individuals to guarantee the corporation’s performance so there is personal liability if there is a breach. Often parents guarantee their kids’ car loans when they are young and have no credit. This is a way to assure the other contracting party that they will get paid or they can sue both the kid and the parents!
Clause of the week
"Party Y agrees to indemnify and save harmless Party X, and its successors and assigns, from any claim, action, liability, loss, damage or suit, arising from its breach of this agreement. In the event of any asserted claim against Party X, Party X shall provide Party Y with reasonable, timely written notice of same and thereafter Party Y shall, at its...