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For receivables sold with recourse, the seller guarantees payment to the purchaser if the debtor fails to pay. True or False?

User Bruno Lee
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Final answer:

For receivables sold with recourse, it is true that the seller guarantees payment to the purchaser if the debtor fails to pay, providing security against the risk of default.

Step-by-step explanation:

True, for receivables sold with recourse, the seller indeed guarantees payment to the purchaser if the debtor fails to pay. This arrangement acts as a form of collateral to insure against the risk of non-payment by the debtor.

In a broader business context, sellers may use similar assurances such as a money-back guarantee to promote trust and reassure buyers, particularly when the buyer has imperfect information about the quality of a product, as is often the case with online or mail-order purchases.

User Nishith  Sheth
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