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Guarantor Letter for Malaysia

Guarantor Letter Template for Malaysia

A legally binding document under Malaysian law where a guarantor commits to fulfilling specified obligations of a principal debtor if the debtor fails to perform. The document is governed by the Malaysian Contracts Act 1950 and must comply with local stamping requirements under the Stamp Act 1949. It outlines the scope of the guarantee, the maximum liability amount, duration, and the specific circumstances under which the guarantee can be called upon. The document includes provisions for enforcement and typically requires proper witnessing and, where applicable, corporate authorization.

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What is a Guarantor Letter?

The Guarantor Letter is a crucial security document in Malaysian business and financial transactions, providing additional assurance for creditors by having a third party guarantee the obligations of a principal debtor. This document type is commonly used in various scenarios including loan agreements, tenancy agreements, and commercial contracts where additional security is required. The letter must comply with Malaysian law, particularly the Contracts Act 1950 and Stamp Act 1949, and typically includes details of the guaranteed obligations, liability limits, and enforcement mechanisms. It's essential in risk mitigation strategies for businesses operating in Malaysia and can be used for both individual and corporate guarantors, with specific requirements for each type.

What sections should be included in a Guarantor Letter?

1. Letter Header: Date, reference number, and formal address block of the creditor/beneficiary

2. Addressee Details: Full name and address of the guarantor

3. Reference to Primary Obligation: Clear identification of the main debt or obligation being guaranteed

4. Guarantee Statement: Express statement of the guarantee and its scope

5. Principal Debtor Details: Identity and details of the person/entity whose obligations are being guaranteed

6. Guarantee Amount: Specific amount or limit of the guarantee

7. Duration of Guarantee: Period of validity or termination conditions

8. Guarantor's Obligations: Specific responsibilities and commitments of the guarantor

9. Execution Block: Signature section with witness requirements

What sections are optional to include in a Guarantor Letter?

1. Demand Procedures: Specific procedures for making a demand under the guarantee, used when complex claiming processes are required

2. Joint and Several Liability: Required when there are multiple guarantors

3. Security Details: Used when the guarantee is secured by specific assets

4. Step-In Rights: Optional provisions allowing the guarantor to step into the position of the principal debtor

5. Currency Provisions: Required for international guarantees or when dealing with multiple currencies

What schedules should be included in a Guarantor Letter?

1. Copy of Principal Agreement: Attached copy of the main agreement or obligation being guaranteed

2. Guarantor's Identity Documents: Copies of relevant identification documents of the guarantor

3. Asset Schedule: List of assets securing the guarantee, if applicable

4. Form of Demand: Template for making formal demands under the guarantee

5. Board Resolution: If the guarantor is a company, resolution authorizing the guarantee

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 | Serial Founder & Legal AI Author

Jurisdiction

Malaysia

Publisher

Genie AI

Document Type

Service Letter

Cost

Free to use
Relevant legal definitions




















Clauses


















Relevant Industries

Banking and Financial Services

Real Estate

Construction

Manufacturing

Retail

Import/Export

Professional Services

Education

Healthcare

Hospitality

Relevant Teams

Legal

Finance

Credit Control

Risk Management

Compliance

Treasury

Commercial Operations

Corporate Secretarial

Business Development

Contract Management

Relevant Roles

Chief Financial Officer

Finance Director

Credit Manager

Legal Counsel

Commercial Director

Risk Manager

Company Secretary

Compliance Officer

Treasury Manager

Contract Administrator

Banking Relationship Manager

Credit Risk Analyst

Industries





Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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