Promissory Note With Personal Guarantee Template for the United Arab Emirates

A Promissory Note With Personal Guarantee is a legally binding financial document that provides enhanced security for creditors in the United Arab Emirates. This instrument combines the unconditional payment promise of a standard promissory note with the additional protection of a personal guarantee, creating a dual layer of security for the creditor. Under UAE law, this document must comply with specific requirements outlined in Federal Law No. 18 of 1993 and Federal Law No. 5 of 1985 to ensure validity and enforceability.

When do you need this document?

You'll need a Promissory Note With Personal Guarantee when extending credit or loans where standard security measures may be insufficient. This is particularly common when dealing with newly established companies that lack substantial credit history, small businesses without significant assets for collateral, or high-value transactions where additional payment assurance is required. Suppliers often use this document when providing goods or services on credit terms, especially in industries where payment delays are common. It's also valuable in family business arrangements, joint venture financing, or when lending to companies with limited liability structures where personal accountability is desired.

Key legal considerations

The document must contain specific elements to be legally enforceable under UAE law. The promissory note portion requires an unconditional promise to pay a definite sum, clear identification of all parties, specified payment terms, and proper execution with signatures and dates. The personal guarantee section must explicitly state the guarantor's unlimited liability and cannot contain conditional language that might void the guarantee. You should ensure the guarantor has the legal capacity to enter into such agreements and understands their personal liability extends to their personal assets. Consider including provisions for late payment penalties, default procedures, and governing law clauses to strengthen enforceability.

Legal requirements in United Arab Emirates

Under UAE Federal Law No. 18 of 1993, promissory notes must be in writing and contain mandatory elements including the term "promissory note," an unconditional promise to pay, the amount in figures and words, payment due date, and parties' full details. The personal guarantee component is governed by Federal Law No. 5 of 1985, requiring clear guarantee language and the guarantor's express consent. Notarization may be required for enforcement, particularly for amounts exceeding AED 100,000 or when dealing with real estate transactions. The document should specify the UAE courts' jurisdiction for dispute resolution and comply with Central Bank regulations if involving banking institutions. Consider translation requirements if parties include non-Arabic speakers, as official translations may be necessary for court proceedings.