Indemnity
A promise to compensate another party for specified loss or liability. In finance documents it can create obligations separate from a guarantee.
Related terms
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Guarantor
A person or company that promises to meet another party’s debt or obligation if the primary debtor fails to do so.
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Personal guarantee
A promise by an individual to repay another party’s debt if the primary borrower does not. For directors, it can turn company borrowing into personal exposure.
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Guarantee agreement
A contract under which a guarantor agrees to meet another party’s obligations if that party does not do so.
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