Deal papers and endings
Guarantee
A promise by one party to be answerable for somebody else's obligation if that obligation is not met — a director standing behind a company's lease, a parent company behind a subsidiary's contract, an individual behind a loan. It names the obligation guaranteed, whether the guarantor can be pursued straight away or only after the main party has been, and what happens if the underlying contract is changed. In many systems it must be in writing and sometimes executed with particular formality.
- In the catalogue
- Deal papers and endings
- Where it can live
- Any of the 184 governing laws
Who uses one
- Landlords and lenders asking for security behind a company obligation.
- Directors and shareholders being asked to guarantee their company.
- Groups guaranteeing a subsidiary's contract to a customer or supplier.
What you are deciding
- Which obligation is guaranteed, and under which contract
- Whether it is capped in amount or in time
- Whether the guarantor can be pursued first or only after the main party
- What happens if the underlying contract is varied
- Whether the guarantee continues if the debt is restructured
- Whether the guarantor may end it for future obligations
- What formalities local law requires
Blanks you leave stay blank and wait in the room. Nothing is filled in from a guess.
The sections a draft usually has
- 1The parties and the guaranteed contract
- 2The guarantee
- 3Nature of the liability
- 4Limits on amount and time
- 5Effect of variations
- 6Continuing security
- 7Demands and notices
- 8Release and expiry
- 9Execution formalities
A general outline, not a required one. What turns up in a draft follows what you described. A contract is written in the order a contract is read.
What people call it
The names this kind of paper goes by. They are here because people search for them. They also filter the catalogue. They are not a wordlist the door matches. At the composer you describe the deal in your own words instead.
- guarantee agreement
- personal guarantee
- parent company guarantee
- surety agreement
- guarantor form
- deed of guarantee
Questions people ask
- What is the difference between a guarantee and an indemnity?
- A guarantee is secondary — it depends on somebody else's obligation. An indemnity is a primary promise to cover a loss and stands on its own. Documents often contain both, and the distinction matters.
- Does a guarantee have to be in writing?
- In many systems yes, and some require particular execution formalities. It is one of the categories where local form requirements are strict.
- Can a guarantor be released?
- Papers of this kind say when — commonly on the obligation ending, or on notice for future liabilities only. Changes to the underlying contract can also affect a guarantor's position, which is why variations get their own clause.
General answers about the document. Not advice about your situation. Not written about any one country.
Where it lives
A contract names the legal system it is governed by. That is a separate decision from which paper it is. You pick it at the door, from any of the 184 units in Governing law, including England and Wales, Delaware, California and New York.
You do not start from this page. Describe the deal in one sentence at the door. Read the draft back in plain language, in the order a contract is read.
Start it at the door →Related kinds