Guarantees FAQ - How does the law view a guarantee?

Date: March 04, 2011

Q. How does the law view a guarantee?

A.  The law deals with guarantees strictly given the onerous consequences of being responsible for another. Any significant change in the contract between the creditor and the primary debtor may well void and vacate the guarantee if the guarantor was neither aware nor agreeable to the change. An example of such a change might be to advance further funds to the debtor or, an increase in the interest rate of a guaranteed loan.