An endorsement is a writing in which someone acts in response to the conduct of another person. This concept, which comes from the French endorsement, is often used in the field of politics.
In everyday language, the notion of endorsement is used as a synonym for support or endorsement. In this case, it is not necessary for the guarantee to materialize in a document or text, but it can be expressed in words or demonstrated with actions. For example: “The coach received the endorsement of the leadership and will remain in office regardless of the result of the next game”, “The president gave his endorsement to the senator to launch his candidacy”, “If you are determined to start your own company has my endorsement ”.
In the commercial field, the guarantee is the signature that is put at the foot of a bill of exchange or other credit document and that implies that the signer will be responsible for his payment in the event that it is not made by the person who has assumed that obligation in the first place.
The guarantee can be understood as a unilateral commitment to pay in favor of a third party. The beneficiary of the guarantee will receive the benefit if the debtor does not comply with the payment commitments. The person who signs the guarantee is known as the guarantor or guarantor.
The guarantor acts as a guarantor of third-party obligations (it only covers the payment of a loan and its interests when the original debtor does not comply with what is due). When the guarantor is a bank, we speak of a bank guarantee.
The application for a mortgage loan, on the other hand, often entails the requirement of a guarantee when: the employment situation of the customer is precarious or unstable; an amount is requested that exceeds 80% of the value of the home to be purchased, according to official appraisal data; the monthly fee would exceed 30% of the client’s income. In these cases, the guarantees are usually: individuals who undertake to cover potential debts (personal guarantee); movable or immovable property (collateral).
Guarantee on first demand
It is known to demand guarantee or a first demand a contract usually onerous and unilateral, whereby the guarantor (also called guarantor, and that can be a savings bank, a bank, an insurance company or credit institution) undertakes to support the principal’s debt (current or potential), through the payment of a specified amount of money without exception.
The guarantor indemnifies the beneficiary of the contract at the moment in which the latter makes the relevant notification, following the corresponding formal steps, regardless of the prior agreement, which is generally associated with obtaining a particular benefit, or with the economic result This is derived from the legal relationship described in the guarantee.
In other words, the first demand guarantee guarantees coverage of the debt without requiring that the default be demonstrated effectively, and independently of the contract. Payment may be requested by the beneficiary, forcing the guarantor to do so without the right to request explanations or verifications. Later, the guarantor will have the possibility to demand compensation if the beneficiary had tried to defraud the guarantor by demanding money due to a situation not contemplated in the guarantee.
This contractual figure has its origins in the German doctrine and emerged to ensure security legal issues related to foreign trade. For Italian doctrine, it is also known as a pure guarantee contract, emphasizing the absence of conditions for its fulfillment.