Guarantee of contract debt

About this guarantee of contract debt

Sometimes a contract does not provide for a guarantee when one is required, and sometimes a guarantee becomes required at a later date to maintain the performance.

This document brings in a guarantor to a situation where the client of a service provider or supplier has failed or is likely to fail to make payment when due. It can be used in any contract situation because it brings in the guarantor by reference to the obligations in the original contract and does not replace the original. Further, this document allows you to change the terms of the original contract in return for the addition of the guarantor, but it is not necessary to otherwise repeat the original contract terms.

That makes this document very flexible. It really does not matter who you need to bring in as guarantor: an individual, a holding company, another subsidiary, or another legal entity. Similarly, the subject of the original contract is not important: it could have been about running a copper mine, building a house or managing your computer systems.

The advantage of using an agreement like this one is that the original remains unaltered: a guarantor can be added at a later date (perhaps when it becomes obvious that the contract is not going to be performed without the incentive of a guarantor), and there is less room for mistakes compared to adding the paragraphs into the original contract.

The law relating to this guarantee of contract debt

The law in this document is contract (common) law.  It is not directly affected by statute law.  However, if the subject matter of the original contract was regulated by statute law, then this guarantee agreement may be affected in similar ways.

This agreement can be executed as a deed or as a contract. The difference between them is that a deed requires nothing in return for the addition of the guarantor, while a contract requires consideration (some benefit at the other party’s expense). Consideration could be financial (as little as a penny), but more usually, it would be a relaxation of the original terms – perhaps a longer period for a debtor to repay his debts, a less punitive interest rate or indeed any other term. If the original agreement was a contract, then consideration will be needed. Otherwise we would suggest that you execute this agreement as a deed.

When to use this guarantee of contract debt

The user of this document would be the provider of a service provider or the supplier of goods that has a client that has failed or is likely to fail to pay his debt. In situations where the reverse is true and the service provider or producer is unable to perform his side of the agreement, Net Lawman offers the following document that would be more suitable: Guarantee of contract performance.

The legal status of the guarantor is not important. The agreement can be used by businesses or individuals. Examples might be:

• a personal guarantee by a company director, an individual, sole trader or partner in a business partnership
• a company guarantee by a holding company, subsidiary or ultimate parent company

This guarantee can be used as a supplementary contract to any contract of performance. Common uses would include guaranteeing:

• agricultural, business or commercial property rents (see below for residential leases)
• payment of a loan (either to an individual or a business, and from either)
• payment in return for a service provided or goods purchased

It would be unusual to use this contract to amend a residential tenancy agreement. If you do need to bring a guarantor into a residential tenancy, we would suggest that both sides mutually agree to cancel the original and draw a new agreement.

Agreement features and contents

The key benefit of using this document over adding a guarantee paragraph to the original contract is the simplicity of use. There is no need to edit and agree the original. That means less room for making a mistake and invalidating the original.

• Can join one or more guarantors
• Guarantee for all aspects of the original contract
• Option to limit the guarantee if necessary
• Guarantor can be a business or individual
• Suitable for any type of contract
• Can be executed as a deed or a contract

The guarantee of contract performance agreement includes the following paragraphs:

• The guarantee
• Changed terms of the original contract
• Guarantor's continued liability
• Rights waived
• Guarantor's indemnity for costs
• Assignment of guarantee
• Miscellaneous matters

Reasons to buy from Net Lawman

Full money back guarantee – buy with confidence
This guarantee of contract debt comes with a no questions asked full money back guarantee. You take no risk that it might not be right. Once you buy it, we’ll give you 30 days to evaluate it in any way you want. If for any reason you’re not happy, just e-mail us and we’ll refund your money in full immediately.

Guidance notes included - prior legal knowledge is not required
Comprehensive guidance notes, written by the author of the document, are included. These notes ensure that you don’t need to be a lawyer or have knowledge of the law to understand which paragraphs you should edit to complete the agreement.

Minimal editing required
This guarantee of contract debt has been written specifically in such a way that you don’t need to spend hours editing it. It uses an approach where you remove the sections that aren’t applicable to you, so you don’t have to add any back, write your own, or worry about whether you are using correct legal language.

Paragraphs have been written to stand alone from each other. Removing one that isn’t applicable to your circumstances doesn’t affect the standing of any other in the template.

Plain language minimises future disagreements
Your guarantee of contract debt is real law written in plain language that all parties will understand. This will minimise the likelihood of later disputes.

If a dispute does arise and you find yourself in court, the judge will look more favourably on a legal agreement written in plain language over one peppered with complicated legal jargon. Your case will be stronger if it is clear that both sides understood the agreement when it was signed.

Buy once – re-use again and again
You can use the agreement as many times as you like for different contracts or to add another guarantor later  – just create a new document from the master version.

Delivered straight to your inbox
As soon as you complete the secure checkout process, we will send your guarantee of contract debt straight to your inbox. We will also keep a copy for you for 60 days in our customer area so you can access it even when you are away from your e-mail.

Still unsure whether this is the right document for you?
If you are unsure whether this guarantee of contract debt is suitable for your particular circumstances, then you have two options. The first is to buy now, evaluate the agreement, and use the 30 day, full money back guarantee to obtain a refund if it isn’t suitable. You take no risk in seeing the template. The second option is to contact us and ask. We can’t offer you legal advice on your situation, but we can help you find the document you want. We aim to respond to your question within 24 hours.