The Personal Guarantee Agreement is a crucial legal instrument in South African business and financial transactions, commonly used when additional security is required for loans, credit facilities, or other financial obligations. This document is essential when a creditor requires extra assurance beyond the principal debtor's commitment, particularly in situations involving new businesses, substantial loans, or where the principal debtor's creditworthiness needs supplementary support. The agreement must comply with South African legislation, including the National Credit Act 34 of 2005, Consumer Protection Act 68 of 2008, and the General Law Amendment Act's requirement for written form. It typically includes comprehensive details about the guaranteed obligations, enforcement mechanisms, and the specific circumstances under which the guarantee can be called upon.
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1. Parties: Identification of the Guarantor, the Creditor, and the Principal Debtor, including full legal names and details
2. Background: Context of the guarantee, including the underlying obligation or facility being guaranteed
3. Definitions and Interpretation: Definitions of key terms and interpretation rules for the agreement
4. Guarantee and Indemnity: Core terms of the guarantee, including the scope and nature of the guaranteed obligations
5. Duration and Extent of Guarantee: Period of effectiveness and monetary limits of the guarantee
6. Nature of Guarantor's Liability: Specifying whether the liability is joint, several, or joint and several, and whether it is principal or accessory
7. Guarantor's Warranties and Representations: Confirmations and statements by the guarantor regarding capacity and authority
8. Creditor's Rights and Remedies: Actions the creditor can take to enforce the guarantee
9. Payments and Interest: Terms regarding payment obligations, including interest on late payments
10. Notices: Process and requirements for formal communications between parties
11. General Provisions: Standard contractual terms including governing law, jurisdiction, and entire agreement provisions
12. Execution: Signature blocks and execution formalities
1. Security: Include when the guarantee is secured by specific assets or collateral
2. Multiple Guarantors: Required when there is more than one guarantor, specifying their respective obligations
3. Corporate Authority: Include when the guarantor is a company, containing specific corporate governance requirements
4. Guarantee Limitations: Include when the guarantee is limited in amount or scope
5. Assignment and Transfer: Include when rights under the guarantee may need to be transferred
6. Priority and Subordination: Include when there are multiple creditors or complex debt structures
7. Tax Provisions: Include when tax implications need to be addressed specifically
8. Compliance with National Credit Act: Include when the guarantee falls within the scope of the National Credit Act
1. Schedule 1 - Guaranteed Obligations: Detailed description of the obligations being guaranteed
2. Schedule 2 - Guarantee Limit and Interest Calculations: Specific financial terms and calculations if applicable
3. Schedule 3 - Security Details: Description of any security or collateral (if applicable)
4. Schedule 4 - Form of Demand: Template for making a demand under the guarantee
5. Appendix A - Corporate Resolution: Required corporate authorizations if guarantor is a company
6. Appendix B - Underlying Agreement Reference: Copy or extract of the underlying agreement being guaranteed
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