Aval

Summary of Aval

A form of guarantee given by a bank or other party to enhance the value of a negotiable instrument. While an aval acts as an unconditional and transferable guarantee of an instrument, the exact scope or nature of the guarantee may not be evident. Avals are well established in Continental law and practice, although there is no equivalent to them in

the common law countries; accordingly, avals are not recognized, per se, in common law courts, but are imputed to have the features of an endorsement to the instrument.

(Main Author: William J. Miller)

Definition of Aval in International Trade

The following is a concept of Aval in the context of international trade law, from the Dictionary of International Trade (Global Negotiator): A guarantee notice that a third party (other than the drawee) places on a draft. This is used when a buyer's credit is in itself not sufficient to justify a sale, and a more creditworthy party is willing to guarantee the deal. Some national laws require that avaled drafts be protested if unpaid when due, in order to give guarantors notice that their contingent liabilities may be called.