A guaranty is an undertaking on the part of one person (the guarantor) which binds the guarantor to performing the obligation of the debtor or obligor in the event of default by the debtor or obligor. The contract of guaranty may be absolute or it may be conditional. An absolute or unconditional guaranty is a contract by which the guarantor has promised that if the debtor does not perform the obligation or obligations, the guarantor will perform some act (such as the payment of money) to or for the benefit of the creditor.
A guaranty may be either continuing or restricted. The contract is restricted if it is limited to the guaranty of a single transaction or to a limited number of specific transactions and is not effective as to transactions other than those guaranteed. The contract is continuing if it contemplates a future course of dealing during an indefinite period, or if it is intended to cover a series of transactions or a succession of credits, or if its purpose is to give to the principal debtor a standing credit to be used by him or her from time to time.
A Maryland Continuing and Unconditional Guaranty of Business Indebtedness Including an Indemnity Agreement is a legally binding document that involves a guarantor (individual or entity) assuming responsibility for a borrower's business debt. This particular guarantee is applicable in the state of Maryland and is designed to provide added assurance to lenders that they will be repaid, even in the case of default by the borrower. This guarantee is considered "continuing" as it remains in effect until the complete repayment of the indebtedness or until the guarantor is released from their obligations through a formal agreement or legal process. It also carries the designation of "unconditional" as there are typically no conditions or restrictions attached to the guarantor's liability. The main purpose of a Maryland Continuing and Unconditional Guaranty of Business Indebtedness Including an Indemnity Agreement is to protect the lender by ensuring that the guarantor assumes full responsibility for the debt, including any accrued interest, fees, or other charges associated with the indebtedness. In case the borrower defaults, the lender can pursue the guarantor for repayment without having to exhaust all remedies against the borrower. In addition to the Maryland Continuing and Unconditional Guaranty of Business Indebtedness, there may be variations or additional types of guaranties commonly used in Maryland, such as: 1. Limited Guaranty: Unlike the continuing guaranty, a limited guaranty may have certain conditions or limitations that restrict the scope of the guarantor's liability. This type of guaranty might cover only a specific portion of the indebtedness or expire after a certain period. 2. Joint and Several guaranties: This type of guaranty involves multiple guarantors who share joint liability for the borrower's debt. In case of default, the lender can pursue any of the guarantors individually for the full amount owed. 3. Continuing Guaranty with Collateral: In some cases, the guaranty might be secured with collateral, such as real estate or other assets owned by the guarantor. This provides an additional layer of security for the lender, as they can seize and sell the collateral to recover the outstanding debt. It is essential for all parties involved, including the borrower, guarantor, and lender, to fully understand the terms and obligations outlined in a Maryland Continuing and Unconditional Guaranty of Business Indebtedness Including an Indemnity Agreement before signing. Seeking legal advice is often recommended ensuring compliance with applicable laws and the protection of the parties' rights and interests.
