Definition of Aval:
Mainland-European term for an unconditional third-party (usually the importers or buyers bank) guaranty of the payment of a bill of exchange or promissory note. Also called avalization, avalkredit, bon aval, pour aval.
Since avals can be forged, all parties should take caution when accepting these notes. Banks usually only provide an aval to issuers with very good credit ratings. The process of avalizing mainly occurs Europe; in the United States, banks have restrictions as to what instruments they may use to provide aval.
An aval is a guarantee that a third party adds to a debt obligation. This third party is not the payee or the holder, but ensures payment should the issuing party default. The debt obligation could be a note, bond, promissory note, bill of exchange, or draft. The third party providing the aval is usually a bank or other lending institution.
Meaning of Aval & Aval Definition