A contract of guarantee is a legal agreement in which a third party promises to pay the debts or fulfill the obligations of another party in case they are unable to do so. This type of contract is known as a tripartite agreement because it involves three parties: the borrower or debtor, the lender or creditor, and the guarantor.

The role of the guarantor in a contract of guarantee is crucial. They provide an additional layer of security for the lender, reducing the risk of non-payment or default by the borrower. Guarantors are often required by lenders in cases where the borrower has a poor credit history or insufficient collateral to secure the loan.

The legal framework for a contract of guarantee is set out in various jurisdictions, including common law and civil law systems. In common law systems, the contract of guarantee is considered to be a separate and distinct contract from the underlying contract between the borrower and the lender. This means that the obligations of the guarantor are independent of those of the borrower, and the lender cannot rely on the underlying contract to enforce the contract of guarantee.

In civil law systems, on the other hand, the contract of guarantee is often considered to be an accessory or secondary contract to the underlying contract. This means that the guarantor`s obligations are linked to those of the borrower, and the lender can enforce the contract of guarantee by relying on the underlying contract.

The tripartite nature of a contract of guarantee is evident from the fact that all three parties must agree to the terms and conditions of the contract. The borrower must agree to the terms of the loan, including the repayment schedule, interest rate, and any other relevant terms. The lender must agree to provide the loan on the agreed terms, and the guarantor must agree to provide the guarantee.

The terms of a contract of guarantee can vary depending on the specific circumstances of the transaction. In most cases, the guarantor`s liability is limited to a specific amount, and the guarantee may be subject to certain conditions, such as the default of the borrower or the lender`s failure to enforce the underlying contract.

In conclusion, a contract of guarantee is known as a tripartite agreement because it involves three parties: the borrower, the lender, and the guarantor. The guarantor`s role is to provide an additional layer of security for the lender, reducing the risk of non-payment or default by the borrower. The terms of the contract may vary depending on the specific circumstances of the transaction, but all three parties must agree to the terms and conditions of the contract.