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Avalize - Explained

What is Avalize?

Written by Jason Gordon

Updated at April 6th, 2023

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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

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avalize explained

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