Personal Guarantee Promissory Note Template for the United Arab Emirates

A Personal Guarantee Promissory Note is a specialized legal instrument that combines the enforcement advantages of a promissory note with the security benefits of a personal guarantee under United Arab Emirates law. This document creates an unconditional promise by an individual to pay a specific debt or obligation, typically when standard corporate guarantees or collateral are insufficient for commercial financing arrangements.

When do you need this document?

You need a Personal Guarantee Promissory Note when banks or financial institutions require additional security beyond corporate guarantees for business loans or credit facilities. This document is essential when you're a shareholder, director, or related party providing personal assurance for company debt obligations. It's commonly required in SME financing, trade finance arrangements, and commercial credit facilities where lenders seek individual accountability. The document is also necessary when restructuring existing debt arrangements or when corporate borrowers have limited credit history or collateral.

Key legal considerations

The document must include specific essential elements under UAE Commercial Transactions Law, including an unconditional promise to pay, the exact amount in both numerals and words, and clear payment terms. You should carefully review the scope of your liability, as personal guarantees can extend beyond the principal amount to include interest, costs, and enforcement expenses. The guarantee may be joint and several if multiple guarantors are involved, meaning each guarantor is fully liable for the entire debt. Consider including limitation clauses regarding maximum liability amounts and specific triggering events that activate the guarantee. Ensure the document clearly defines default scenarios and notice requirements before enforcement actions.

Legal requirements in United Arab Emirates

Under UAE Federal Law No. 18 of 1993, the promissory note must be in writing and contain all essential elements including the maker's signature, beneficiary identification, and specific amount. The document should comply with UAE Central Bank Regulation No. 29/2011 regarding banking instruments and their proper handling. While notarization is not mandatory for validity, it's recommended for enhanced enforceability and may be required by certain financial institutions. The guarantee provisions must comply with UAE Civil Transactions Law requirements for valid personal guarantees, including clear consent and understanding of obligations. All parties should be properly identified with complete details, and the document should specify the governing jurisdiction for any disputes. Consider translation requirements if any party doesn't read Arabic, as courts may require certified translations for enforcement proceedings.