Warranty

Warranty (AVAL)

A warranty is also frequently described as an aval and constitutes the assumption of a risk by the financial institution towards a third party which is agreed upon in writing. An aval is an accessory undertaking to pay by a financial institute offering a guarantee to make a payment to the beneficiary of the aval and to make the payment instead of its client if a specific event agreed upon between the parties to the contract arises.

The customer receives a creditworthiness advantage through the financial institution‘s trust, avoids capital commitments and has a liquidity advantage as a result.

The most widely used types of sureties are:

• Performance warranty
• Service warranty
• Advance payment warranty
• Rental payment warranty