Enforceability and Types of Guaranties

Summary

This practice note discusses the elements of an enforceable guaranty, the various types of guaranties that may be employed in a financing transaction, and related legal issues. A guaranty is a contract, and, as with any other contract, is subject to the basic principles regarding contract formation, construction, and enforcement. The type of guaranty is also important in determining the obligations that are guaranteed and conditions to the guarantor's obligations under the guaranty.