Legal Definitions - support obligation

A support obligation is a type of secondary obligation or letter-of-credit right that helps ensure the payment or performance of certain types of financial assets. These assets can include:

• Accounts
• Chattel paper
• General intangibles
• Documents
• Healthcare-insurance receivables
• Instruments
• Investment property

For example, let's say a company wants to purchase some equipment from another company. The seller may require a support obligation from the buyer's bank to ensure that the buyer will make the necessary payments on time. This support obligation would act as a guarantee that the seller will receive the money they are owed.

Another example could be a healthcare provider who has a support obligation from an insurance company. This support obligation would ensure that the insurance company will pay for any medical services provided to their policyholders.

Overall, support obligations are a way to provide additional security and assurance when dealing with financial transactions and assets.