An aval guarantor guarantees a third party for a promissory note debt in the event that the person to whom the promissory note was granted cannot pay the obligation. The aval guarantor is liable for payment of the promissory note in whole or in part.
The granting of an aval
A promissory note surety may be granted by a promissory note debtor, who is a business entity, under its authority. The bank can provide promissory note suretyship on both drafts and promissory notes.
Aval contract – how does it work?
A bank aval is the granting of money to a customer on the basis of some form of surety, guarantee or other security. Banks grant an aval on a one-time basis or on the basis of an agreement, which may specify, for example, the limit of cash or the period for which it is granted. A bank aval can be obtained by using a special line in the bank, which is intended precisely for granting such cash.
Differences between aval and surety
Surety is an institution for securing a personal debt, which we know about from the Civil Code. Aval, or promissory note surety, at first glance looks similar. Also, it is intended to provide additional security for the performance of an obligation. The differences that exist between these sureties make the aval a type of special security, to which the provisions on suretyship from the Civil Code do not apply. In addition, a promissory note surety is riskier.
