Asked by Pannu Jassi on Jul 05, 2024
Verified
A guarantor is entitled to receive from the debtor all outlays made on behalf of the guaranty arrangement.
Guarantor
A person or entity that agrees to be responsible for another's debt or performance under a contract if the original party fails to meet their obligations.
Debtor
An individual or organization that owes money to another party, often referred to in contexts involving loans or credit.
- Understand the concept and implications of guarantees and guaranties in financial agreements.
Verified Answer
JM
James Martinez-BurneyJul 11, 2024
Final Answer :
True
Explanation :
A guarantor, after fulfilling the obligations under the guaranty by paying the debtor's debt, is entitled to receive from the debtor all the amounts paid out on behalf of the guaranty arrangement, including any expenses or losses incurred. This is based on the principle of subrogation, where the guarantor steps into the shoes of the creditor and gains the right to be reimbursed by the debtor.
Learning Objectives
- Understand the concept and implications of guarantees and guaranties in financial agreements.