What is the definition of a guaranty?

The definition of a guaranty is a promise to pay the debts of another party, which makes option B the correct choice. This financial concept typically involves one party agreeing to assume responsibility for another party's financial obligations or debts if that party defaults. In many cases, a guarantor provides this assurance to lenders or creditors, strengthening the borrower's position and potentially facilitating approval for loans or credit. The understanding of this term is important in various financial and contractual contexts, particularly within the fields of lending and credit.

The other options refer to different concepts: a contract that outlines service expectations describes service agreements, a legal document for transferring ownership aligns with deeds or titles, and a warranty on product performance relates to consumer protection and guarantees regarding product functionality. Each of these definitions serves a distinct purpose in legal and financial transactions, but they do not accurately capture the essence of what a guaranty fundamentally entails.