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Personal Guarantee Agreement Template for England and Wales

A Personal Guarantee Agreement under English and Welsh law is a legally binding document where an individual or entity (the guarantor) promises to fulfill the obligations of another party (the principal debtor) if they fail to do so. The agreement creates a secondary obligation that becomes enforceable upon the default of the principal debtor. It must comply with specific formality requirements under English law, including being in writing and signed by the guarantor.

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What is a Personal Guarantee Agreement?

A Personal Guarantee Agreement is commonly used in business and financial transactions under English and Welsh law when additional security is required for a debt or obligation. It provides creditors with additional protection by allowing them to pursue the guarantor if the principal debtor defaults. The agreement typically includes details of the guaranteed obligations, conditions for enforcement, and the extent of the guarantor's liability. It's particularly common in business loans, commercial leases, and supplier agreements where the creditor requires additional security beyond the principal debtor's covenant.

What sections should be included in a Personal Guarantee Agreement?

1. Parties: Identifies guarantor, creditor, and principal debtor

2. Background: Explains context and underlying obligation being guaranteed

3. Definitions: Defines key terms used in the agreement

4. Guarantee and Indemnity: Core obligations of the guarantor

5. Scope of Guarantee: Extent and limitations of the guarantee

6. Duration: Term of the guarantee and conditions for termination

7. Guarantor's Representations: Warranties about capacity and authority

8. Enforcement Provisions: Creditor's rights and remedies

What sections are optional to include in a Personal Guarantee Agreement?

1. Security Provisions: Additional security arrangements when guarantee is secured against assets

2. Multiple Guarantors: Joint and several liability provisions when more than one guarantor is involved

3. Foreign Currency Provisions: Exchange rate and currency conversion terms when guaranteed obligations are in foreign currency

4. Step-In Rights: Rights to take over underlying contract in complex commercial arrangements

What schedules should be included in a Personal Guarantee Agreement?

1. Schedule 1 - Guaranteed Obligations: Detailed list of obligations being guaranteed

2. Schedule 2 - Security Documents: List of related security documents if applicable

3. Schedule 3 - Form of Demand: Template for making demands under the guarantee

4. Schedule 4 - Conditions Precedent: Prerequisites for guarantee effectiveness

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents

Jurisdiction

England and Wales

Publisher

Genie AI

Document Type

Guarantee Agreement

Sector

Banking

Cost

Free to use

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