What Is a Contract Guarantee?

Contract guarantee refers to legal measures stipulated by law or agreed by the parties to ensure that the debtor fulfills its debts and guarantees that the creditor's claims are realized. Contract guarantee is necessary to improve the legal validity of the contract and protect the parties' legitimate rights and interests. For this reason, China has adopted the General Principles of Civil Law and the Tenth National People's Representative on March 16, 2007, such as guarantees, mortgages, liens and pledges. Both are designed to guarantee the fulfillment of debts and the realization of claims. ^[1]

Contract guarantee

1. General guarantee and special guarantee. General guarantee is a guarantee that guarantees the ownership formed by the debtor as the center. A special guarantee is a guarantee specifically created for a single debt. (What we usually call a guarantee)

2. People's security, material security, money security.

3. Statutory guarantees and agreed guarantees. China's statutory guarantee only provides for a lien guarantee.

4. Original guarantee and counter guarantee. The original guarantee is a guarantee established for the principal contract debt; the counter-guarantee is a guarantee established for the secured debt. Article 4 of the Guarantee Law: When a third party provides a guarantee to a debtor, it may require the debtor to provide a counter-guarantee.

1. Dependency: Refers to the main contract on which the contract guarantee is subordinated to the guaranteed debt, that is, the contract on which the main debt depends. The contract guarantee is premised on the existence of the main contract, is changed due to the change of the main contract, is eliminated due to the extinguishment of the main contract, and is invalidated due to the invalidity of the main contract.

2. Supplementary: It means that once the contract guarantee is established, a certain right and obligation relationship is added on the basis of the main debt relationship.

3. Guaranteeability: refers to the guarantee of the contract to guarantee the performance of debts and the realization of claims.

1. The contract guarantee does not exceed the scope of the contract's internal validity.

2. Contract guarantees are mainly generated by the parties' agreement; contract preservation is entirely generated by the law.

3. Contract guarantees are more important for the protection of creditor's rights than for contract preservation because creditors do not have the property to control and realize the creditor's rights, and they cannot enjoy the priority of compensation to third parties.

4. Contract guarantee is that the debtor does not perform the debt; contract preservation does not necessarily take this as a prerequisite.

Contract security works guarantee guarantee liquidated damages