What Is A Guaranty And Security Agreement

Published on: December 20, 2020

A security agreement under U.S. law is a contract that governs the relationship between the parties with some kind of financial transaction known as a secure transaction. In the case of a secure transaction, the Grantor (usually a borrower, but perhaps a surety or collateral) assigns the beneficiary (usually the lender) a security interest for personal property called security. Stocks, livestock and vehicles are examples of typical warranties. A guarantee contract is not used to transfer any shares in real estate (land/real estate), only personal property. The document used by lenders to obtain a right to pledge to real estate is a mortgage or an act of trust. Under Dutch (Dutch) law, the Dutch civil code designates the guarantee as an agreement by which a third party undertakes a contractual creditor to comply with a debtor`s contractual obligations. Such a guarantee agreement is concluded between the surety company and the creditor. The debtor of the guaranteed commitment is not required to participate in such an agreement. It is even possible that such a guarantee agreement will be concluded without the debtor`s knowledge or agreement. Article 7:850 of the Dutch Civil Code is established: 1. A guarantee agreement is an agreement under which one of the parties (hereafter referred to as the guarantee) has committed to the other party (the “creditor”) to fulfil an obligation that a third party (the principal debtor) has owed or returned to the creditor.

2. For the validity of a guarantee agreement, it is not necessary for the principal debtor to know the existence of the guarantee in question. 3. The legal provisions relating to joint and several bonds apply to a bonding contract, as long as the provisions of this security do not deviate from it. With regard to the nature of the commitment guaranteed by a guarantee agreement under Dutch law, Article 7:854 of the Dutch Civil Code states that if the principal debtor`s guaranteed undertaking constitutes a benefit other than the payment of a sum of money, the surety contract is considered a guarantee of the creditor`s claim on the compensation of the money which is attributable to the principal debtor if he has not fulfilled his principal debt to the creditor, unless the guarantee expressly provides.

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