Definition
A guarantee is a commitment by one person (guarantor) to secure the fulfilment of an obligation contracted by another (principal debtor) with a third party (beneficiary of the guarantee). It is, therefore, a guarantee granted in favour of a third party, which implies the responsibility of the guarantor in the event of breach of the principal debtor’s obligations towards the beneficiary of the guarantee.
Types
Mainly, guarantees can be classified according to the following categories:
- According to the guaranteed obligation:
- Payment guarantee: Is one that aims to guarantee the payment of goods or services of the principal debtor to the beneficiary of the guarantee.
- Technical guarantee: The one whose purpose is to guarantee the execution of works or services.
- According to the issuer of the guarantee:
- Personal guarantee: The one in which the guarantor is a natural or legal person.
- Bank guarantee: The one in which the guarantor is a financial institution.
Costs of a guarantee
The main costs associated with a guarantee lie in the commissions charged for the formalization of the transaction and for the risk taken by the guarantor.
Likewise, notary fees will be added to the aforementioned commissions in the event that the guarantee is executed before a Notary Public.
