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What is an Aval?
An Aval is a formal assurance or guarantee that a third party adds to a debt obligation or a contractual document (generally a Bill of Exchange). The third party is not the payee or payer but a neutral person who attests that the holder will meet their responsibilities and debt obligations.
Avalize is an act of guaranteeing the obligations of a buyer to meet their responsibilities under a debt agreement. Usually, when a person applies for a loan or is involved in a promissory note and purchase agreement, a third party avals the document, stating that all the debt obligations will be carried out by the individual.
A bank or any financial institution can aval a contractual document, this is a formal assurance that the buyers obligations will be carried out as contained in the contractual document.
Back To: COMMERCIAL LAW: CONTRACTS, PAYMENTS, SECURITY INTERESTS, & BANKRUPTCY
Related Topics
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What is the role of a Guarantor or Surety of a negotiable instrument?
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Surety
- Cosign
- Accommodation Paper Definition
- Secondary Liability
- Avalize Definition
Academic Research for Avalized Draft
- Documentary Risk in International Trade, Meral, Y. (2018). In Strategic Design and Innovative Thinking in Business Operations (pp. 413-431).
- Options for Capital Financing, Guzik, M. (2011). In CFO Techniques (pp. 95-112). Apress. Forfaiting: a user's guide what is it, who uses it and why, Moran, J. (1999). Credit & Financial Management Review.
- Negotiable Obligations for Discount: Notes, Acceptances, DPUs and BPOs, Dolan, J. F. (2013). Banking & Finance Law Review, 29(1), 103.
- Negotiation Letters of Credit, Dolan, J. F. (2002). Negotiation Letters of Credit. Banking LJ, 119, 409.
- Bank Aval, Jones, S. A. (2018).In Trade and Receivables Finance (pp. 177-189). Palgrave Macmillan, Cham.
- Factoring and Forfaiting, Bhogal, T. S., & Trivedi, A. K. (2008). In International Trade Finance (pp. 132-142). Palgrave Macmillan, London.
- Documentary collections as a method of payment in international sale transactions, Kotelo, M. A. (2015). (Doctoral dissertation, University of Johannesburg).
- Banking Services: The impact of deregulation, Hogan, J., & Barclays Bank Plc. (1991). The European Marketplace, 187-194.
- The Export Trade Note: A New Instrument for International Trade, Ludwig, E. A., & Coursey, M. J. (1986). Ga. J. Int'l & Comp. L., 16, 381.
- Reduction of External Funding Needs, Mntysaari, P. (2010). In The Law of Corporate Finance: General Principles and EU Law (pp. 21-82). Springer, Berlin, Heidelberg.
- The European Monetary Union and Its Impact on Medium and Long-Term Trade Agreements, Marquis, M. (1997). ILSA J. Int'l & Comp. L., 4, 1199.