EndorsementA endorsement it’s a written in which someone acts in response to the conduct of other person. This concept, which comes from the French endorsement, is usually used in the field of politics.

In everyday language, the notion of collateral is used as synonymous with support or endorsement. In this case, it is not necessary for the guarantee to materialize in a document or text, but can be expressed in words or demonstrated with actions. For instance: “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, you have my endorsement”.

In the commercial field, the guarantee is the firm that stands at the foot of a bill of exchange or from another credit document and that implies that the signer will be liable for his payment in the event that it is not made by the person who assumed said 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 guarantor or guarantor.

The guarantor acts as 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, there is talk of Bank guarantee.

The application of a mortgage loan, on the other hand, usually entails the requirement of a guarantee when: the client’s employment situation is precarious or very 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 (real guarantees).

Guarantee on first demand

EndorsementIt is known by the name of guarantee on first demand or at first request yet contract generally onerous and unilateral, whereby the guarantor (also called guarantor, and which may be a savings bank, a bank, an insurance company or a 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 compensates to 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 that emerges from the legal relationship described in the guarantee.

In other words, the first demand guarantee guarantees debt coverage without requiring proof of default effectively, and independently of the contract. Payment can be requested by the beneficiary, forcing the guarantor to do so without the right to request explanations or checks. 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 origin in German doctrine and arose to guarantee the security legal in matters related to foreign trade. For Italian doctrine it is also known as pure guarantee contract, emphasizing the absence of conditions for its fulfillment.