Guaranty vs Guarantee (Legal Definition And Use In Contracts)

What is the difference between Guaranty vs Guarantee?

What’s their legal definition?

How are they used in contracts and legal writing?

Keep reading as we have gathered exactly the information that you need!

Let’s dig into our legal dictionary!

Are you ready?

Let’s get started!

Difference Between Guarantee And Guaranty 

What is the difference between guaranty and guarantee?

We see articles using terms like guaranty and others referring to the word guarantee.

It may get confusing as to what they mean and if there are any real differences between them.

In this article, we will break down the definition of each of the words guaranty and guarantee so it all makes sense.

Let’s first define each of these terms.

What is a Guarantee

The term “guarantee” can be used as a noun or a verb.

The word guarantee has a broad scope and is more common than the word guaranty.

If it is used as a noun, it typically means some form of promise or agreement.

For example:

The company’s guarantee is quite comprehensive and will even include accidental damage
Author

If it is used as a verb, then we are referring to the “act” of making a promise or agreement.

For example:

I can guarantee you that John will finish first place in the race
Author

The word guarantee can be used in the financial context where one person agrees to cover another person’s debt or liability.

For example:

The company founder personally guaranteed the company’s line of credit facility
Author

Related words to guarantee are guarantees, guaranteed, and guaranteeing.

What is a Guaranty 

The word “guarantee” is only used as a noun.

Guaranty means a promise to do something if something happens.

The word guarantee is an obsolete form of the word guarantee (guarantor and guarantee).

In most cases, a guaranty may be linked to a promise to pay a sum of money in case another does not pay.

For example:

Suzane was asked to provide a guaranty to the bank to borrow money for her corporation 
Author

When a person offers another, he or she is referred to as the guarantor.

The plural of the word guaranty is guaranties.

Guarantee vs Guaranty Examples

Let’s look at a few examples of guarantee and guaranty to better illustrate the point.

This exercise can help clarify the difference between guaranty and guarantee.

A guarantee is a promise that something will be done or certain conditions fulfilled. 

Typically, guarantees are formal written pledges given by one to another.

For example:

The manufacturer guarantees the proper functioning of the product for at least a year
Author
The service provider guarantees that the work will be done in a professional and workmanlike manner
Author
This is the season where companies offer their best price guarantee.
Author

A guaranty is only used as a noun and has a narrow scope referring to something given as a “security” to protect another for losses, damages, or liability.

For example:

Without a guaranty, the bank will not provide you a loan
Author
When Mary signed the guaranty, she did not expect to have to pay $1,000 to cover John’s debt
Author

Guaranty vs Guarantee In Contracts

Let’s look at how we use the words guaranty or guarantee in contracts and legal writing.

Example of “Guaranty”: Commercial Guaranty

This Guaranty shall not (unless specifically provided below to the contrary) affect or invalidate any such other guaranties. Guarantor’s liability will be Guarantor’s aggregate liability under the terms of this Guaranty and any such other unterminated guaranties.

Example of “Guaranty”: Guaranty of Non-Recourse

This GUARANTY OF NON-RECOURSE OBLIGATIONS (this “Guaranty”), dated as of the date hereof is executed by the undersigned (“Guarantor”), to and for the benefit of Party A, a Delaware limited liability company (“Lender”).

Example of “Guarantee”: Limited Guarantee

Subject at all times to the terms and conditions set forth in this Limited Guarantee, the Guarantor absolutely and irrevocably guarantees to the Guaranteed Party the due and punctual performance and discharge of any payment obligations of Parent

Example of “Guarantee”: Irrevocable Guarantee

The Guarantor, hereby unconditionally and irrevocably guarantees, as primary obligor and not merely as surety, the due and prompt payment by the Corporation of all present and future indebtedness, liabilities and obligations (including all principal, interest, fees, expenses and other amounts) of any and every kind, nature and description (whether direct or indirect, joint or several, absolute or contingent, matured or unmatured, joint or several, in any currency and whether as principal debtor, guarantor, surety or otherwise) of the Corporation to the Creditor under, in connection with or with respect to the Transaction Documents as and when due, whether at stated maturity, by acceleration, declaration, demand, or otherwise;

Takeaways 

So what is the legal definition of Guaranty vs Guarantee?

What is a guaranty?

What does a guarantee mean?

Let’s look at a summary of our findings.

Guaranty vs Guarantee

  • Guarantee used as a noun refers to an agreement or if it is used as a verb, it is the act of making a promise
  • Guaranty is more narrow in scope and refers to an agreement or a promise made by one towards another 
  • We see the word guarantee quite often in the context of consumer warranties, assurance of quality and good performance
  • The word guaranty is primarily used in the legal and financial context referring to a promise to answer for another’s debt
Attestation
Bond
Certification 
Commercial guaranty 
Conditional guarantee 
Irrevocable guarantee
Personal guaranty 
Pledge 
Promisee
Promisor
Surety 
Warranty
Author