(i) A written undertaking given by one party to another to answer for the fulfillment of the obligations of a third party. (ii) A facultative reinsurance.
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REINSURANCE: Facultative Reinsurance.
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UK: Promise to answer for the debt or default of another person. It is unenforceable unless evidenced in writing. The party giving the guarantee is the guarantor or surety (an insurer), the person receiving is the guarantee or creditor (e.g. the employer) and the person whose debt or performance, etc., is guaranteed is the principal (e.g. the employee). A fidelity guarantee policy may be either insurance by way of indemnity only, or a combination of both indemnity and guarantee in which case the law of insurance applies as between the insurer and the insured (the employer), but guarantee law applies between the insurer and the principal (the employee). The policy is one of ‘insurance only’ if effected without the constructive knowledge and consent of the principal. See INSURANCE GUARANTEE; PURE GUARANTEE.