fjárábyrgð

Fjárábyrgð, often translated as financial security or financial guarantee, is a legal concept primarily found in Icelandic law. It refers to a commitment made by one party to ensure the financial obligations of another party are met. This can manifest in various forms, most commonly as collateral or a pledge.

Essentially, a fjárábyrgð serves to protect the interests of a creditor by providing them with recourse should the primary debtor fail to fulfill their contractual duties. This could involve repayment of loans, performance of services, or other financial commitments. The underlying principle is to mitigate risk for the party to whom a financial obligation is owed.

The specific terms and conditions of a fjárábyrgð are typically outlined in a contract or agreement. This might include specifying the assets that serve as security, the conditions under which the security can be invoked, and the process for its liquidation or realization. Common examples include mortgages on real estate, pledges of movable property, or a personal guarantee from a third party. The intent is to provide a tangible or enforceable means for the creditor to recover their losses.