“Guaranty” or “Guarantee”?

Today, for the heck of it, I investigated the difference between guaranty and guarantee.

Here’s what Bryan Garner says in A Dictionary of Modern Legal Usage (1995):

The distinction in BrE once was that the former [guarantee] is the verb, the latter [guaranty] the noun. Yet guarantee is now commonly used as both n. & v.t. in both AmE and BrE. … .

In practice, guarantee, n., is the usual term, seen often, for example, in the context of consumer warranties or other assurances of quality or performance. Guaranty, in contrast, is now used primarily in financial and banking contexts in the sense “a promise to answer for the debt of another.” Guaranty is now rarely seen in nonlegal writing, whether in G.B. or in the U.S. Some legal writers prefer guaranty in all nominal senses.

Guaranty was formerly used as a verb but is now obsolete as a variant of guarantee, v.t.

That seems straightforward enough, but Bryan goes on to refer to the “more modern legal use” of guaranty as a noun in the following example: “Footnote 10 indicates that Congress is without power to undercut the equal-protection guaranty of racial equality in the guise of implementing the Fourteenth Amendment.” I’m not sure how that relates to his statement that it’s now used primarily in finance and banking.

The New Fowler’s Modern English Usage (R. W. Burchfield ed., 3d ed. 1996) offers what appears to be a simple rule:

Guarantee, guaranty. “Fears of choosing the wrong one of these two forms are natural, but needless. As things now are, -ee is never wrong where either is possible” (Fowler, 1926). The advice is still sound.

But this raises the question, When is either possible, as opposed to just one or the other?

For what it’s worth, here’s some empirical evidence on use of guaranty and guarantee as nouns: In the past year, guaranty and its plural guaranties were used in all capitals in 2,809 contracts filed on the SEC’s EDGAR system. By contrast, in the past year guarantee and guarantees were used in all capitals in 2,083 contracts filed on EDGAR. For the most part, these words are used in all capitals only in titles, headings, and disclaimers, and it’s safe to assume that in these contexts they’re used as nouns. (I structured the searches this way so as not to retrieve these words used as verbs.) These results indicate that overall, among U.S. corporate lawyers there’s a pretty even split between guaranty and guarantee used as nouns.

When I ran the same searches but added to the search term credit agreement in all capitals, I got 788 hits for guaranty and guaranties and 279 hits for guarantee and guarantees. This suggests that in the context of finance, guaranty is indeed the preferred form of the noun.

But even in this context guarantee the noun was used a quarter of the time, so in the interest of simplicity I’m inclined to use in all contexts guarantee as both noun and verb. To insist on a distinction between the noun forms guaranty and guarantee is to invite continued confusion.

About the author

Ken Adams is the leading authority on how to say clearly whatever you want to say in a contract. He’s author of A Manual of Style for Contract Drafting, and he offers online and in-person training around the world. He’s also chief content officer of LegalSifter, Inc., a company that combines artificial intelligence and expertise to assist with review of contracts.

26 thoughts on ““Guaranty” or “Guarantee”?”

  1. Hey Thanks for that explanation.

    I was writing a technical Specification for a Equipment for the client company. And i had initially written Guaranty. But when it was returned with Client comments , they corrected it as Guarantee. And dictionary.com dint mentioned any difference in the words. So a google search led me here. Thanks for the effort. Clears up the confusion.

    • I am a legal assistant and was working on a mortgage insurance provisions draft. I had use Guarantee and was corrected with Guaranty. I am still confused as to any actual difference other than possibly preference, but it does seem as though Guaranty is the preferred variation with respect to legal and financial use.

  2. Ken,
    Love your site. Wondering if you can provide further explanation of the terms in the “verb” context. Above you point out that, in the noun sense, the plural of “guaranty” is “guaranties.” Would the same hold true for the verb context. I was struck by this in reviewing the recent JP Morgan — Bear Stearns “Guaranty Agreement” available here: http://graphics8.nytimes.com/images/blogs/dealbook/BSguaranty.pdf

    Paragraph 1 states: “The Guarantor hereby unconditionally guaranties . . . .”

    I assume this is correct, but would love your confirmation.

    Thanks in advance.

  3. Very interesting and useful article. I’m right now studying real estate contracts and the text I’m using uses “guaranty” as a verb: “the buyer would prefer a warranty deed to guaranty that the title is good…” The book was printed in 2005.

    Funny enough this same book caused me to do a search for will vs shall less than an hour ago.

    I honestly think part of the reason these obsolete and seemingly ambiguous terms and word forms are generally restricted to fine print in contracts is to keep people from understanding what the clauses mean without the aid of an attorney. I’m glad there are sites like this that help clear up what could be costly confusions for people like us. Keep up the good work!

  4. Dear Ken,

    Thanks for your research on “guaranty” versus “guarantee”; I found your article via a Google search. As a Mathematician/Scientist, I am disappointed with the messy results. If I were Dictator of the Universe, I would decree that Guaranty/Guarantee must follow the beautiful and logical example of Warranty/Warrantee … ((

  5. Ken, my 1957 edition of Black's gives the primary definition of "guarantee" as "One to whom a guaranty is made." That has always guided me, and thus I like the "warranty/warrantee" point made in Dr. Kozuh's post. Having said all that, in my corporation I am not only the only person who uses "guaranty," I seem to be the only person who cares about the distinction. "Guarantee" is winning out. All best.

    • This just came up in an argument yesterday and I have to agree that it should follow all of the other similar word structures. I bet that this was screwed up a long time ago by some influential person and that's why it stuck. I will continue to use it the way the language itself defines it: The guarantor provides a guaranty to the guarantee. [<rant>although homophones annoy me, not that it matters here</rant>]

      • Nice, clear explanation, JMM, and you explained it the way that I explained it when I was training young associates. Back when I practiced corporate finance law (including asset-backed lending and structured finance), we used three different words to serve three different meanings. The "guaranty" is the obligation of the "guarantor" in favor of the "guarantee" (or the "beneficiary). When properly and consistently used in the documents, there is no confusion about whether the "ee" means X or Y or perhaps either or both. I believe that Black's supports this usage. The risk of removing "technical usage" from complex legal documents simply to make them less confusing to the lay reader is that in many cases technical usage arises to clarify, not to obfuscate (as some intimate). I mean no offense to Mr. Garner, I've worked with him in the past and agree with him in most cases. Just not this one.

        • Dutch: The fact that this post is the most visited on my blog suggests that there's plenty of confusion. As for Black's, it quotes Garner—not surprising, seeing as he's the editor.

          More generally, I'm concerned not with making complex legal documents less confusing to the lay reader, but rather with making the language of business contracts less awkward and confusing for the lawyers and clients who have to read them. If you find any of my analyses lacking, I invite you to do battle with me in the marketplace of ideas.

          Meanwhile, I continue to see no merit in perpetuating the guaranty/guarantee distinction.


  6. Drafting resolutions related to financing led me to this most interesting and helpful post. I personally feel more comfortable using “guaranty” as a noun and “guarantee” as a verb, though I can’t substantiate why. I wonder—would it be a glaring inconsistency to use both spellings in the same document based on this usage?

  7. Katie: The distinction you prefer is the traditional one, so reflecting that distinction in a document wouldn’t raise eyebrows. Ken

  8. I'm not a lawyer, so, correct me if I am wrong or if this passes for "sound confusion":
    "Guarantor guaranties that Guarantee may rely upon the Guaranty for the duration of the Guaranty; in so far as Guarantee requests satisfaction under the Guaranty for a guaranteed obligation from Guarantor in writing and in so far as Guarantor maintains the legal means for duration of Gauranty to facilitate fulfillment of the Guaranty for Guarantee."

  9. "As things now are, -ee is never wrong where either is possible."

    "But this raises the question, When is either possible, as opposed to just one or the other?"

    I believe that in the context of Fowler's quote, "either" means "one or the other".

    First, the quote is otherwise meaningless. To say that "-ee" is possible whenever both "-ee" and "-y" are possible would be a tautology. It is unlikely that Fowler intended to make a tautologous statement.

    Second, "either" is singular. If he had really meant "both", it is likely that he would have written "both".

    Third, from a logical point of view, "either" appears here in a negative position, i.e., in a condition ("when either is possible"). Like the word "any", the word "either" usually means "at least one" when it is used in negative positions. Compare: "If either of you makes a mistake, the project will fail"; "Fraud and theft are potential problems. If either is possible, our investment is not secure".

    Fourth, the sentence containing "either" is offered to substantiate the preceding sentence, "Fears of choosing the wrong one of these two forms are natural, but needless". So I think the only meaningful reading is: "whenever one of -ee or -y is possible, then -ee is never wrong". Of course this is logically equivalent to "when -y is possible, then so is -ee".

  10. I propose we add an umlaut over the second "e" and do away with the use of "y." If we do not add an umlaut over the second "e," then I propose we abandon the "ee" spelling and use only the version ending with "y." Agreed?

  11. But what about the use of ‘guarantee’ to mean ‘guarantied/guaranteed party’? This seems to be a logical, elegant solution. Indemnitors, indemnitees, employers, employees, assignors, and assignees all agree.

  12. Is the following analysis of the three sentences sound?

    (1) The guarantors guaranty the guarantee the guaranty.

    (2) The guarantors guarantee the guarantee the guarantee.

    (3) The guarantors guarantee the guarantee the guaranty.

    Guaranty can be used as a noun, as a type of contract; or as a verb, where both third person present tense and past tense, “guaranties” and “guarantied”, are recognizable.

    Guarantee can also be used as a noun, as a type of contract and as “one to whom a guaranty is made”; or as a verb, where both third person present tense and past tense, “guarantees” and “guaranteed”, are also recognizable.

    Option (1), where “guarantee” is used both as a noun meaning a type of a contract and as a verb, is comparatively readable in the sense that it distinguishes “guarantee” used as a noun to mean the “one to whom a guaranty is made”. However, as noted above, where “guaranty” formally can be used as a verb, it is now near obsolete as a variant of “guarantee”. The clearest writing in this context would follow the near obsolete usage.

    Option (2), is the least readable in this context, though the safest bet under Fawler’s proposition. “Fears of choosing the wrong one of these two forms are natural, but needless. As things now are, -ee is never wrong where either is possible.” (For both the noun and verb usage, I suppose.)

    Option (3) is the traditionalist usage where “guarantee” is the verb and “guaranty” the noun.

    If a distinction is to be made between contractual guarantee (in the
    consumer warranty context) and guaranty, (in the “answer for debt” context), confusion reigns further in the “to whom a guaranty is made” usage. In the consumer warranty context, only two parties are involved. Thus the party designated as the “guarantee” is the consumer. In the “answer for debt” context, three parties are involved, the guarantor, the debtor and the lender/obligee. Confusion reigns further as to whether it is the debtor or the lender/obligee “to whom a guaranty is made”. Though if the “warrantor warrants the warrantee the warranty” analogy is extended, it would be the lender as the obligee.

  13. In the world of insurance, we prefer the term guaranty. Especially with surety bonds. I often see rookies mispronounce the word and say guarantee in error.


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