A guarantor is a third party in a contract who promises to pay for certain liabilities if one of the other parties in the contract defaults on their obligations. Guarantors sometimes appear on insurance contracts and also provide a sort of insurance themselves.
Sometimes, one party can only get a loan from another party, or can only get a project approved, if a guarantor guarantees payment for any potential losses or liabilities. This situation commonly arises in the construction industry, given the extremely high amounts of money invested in construction projects.
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