LETTER OF GUARANTEE
- A contract issued by the bank on behalf of a customer who entered a deal to purchase goods from a supplier. In case of default, the bank will take responsibility by meeting any financial obligations to the supplier.
- A document from the bank on behalf of a call writer, which guarantees the writer owns the underlying asset and the bank will hand over the securities should the call be applied.
An entity who assumes this responsibility is called guarantor.
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