Guarantor Agreement Template for Australia

The Guarantor Agreement is a fundamental legal instrument in Australian business and financial transactions, used when a third party needs to provide additional security for a borrower's obligations. This document is essential in various contexts, from commercial lending to residential property purchases, where additional security is required beyond the principal debtor's commitments. A properly drafted Guarantor Agreement must comply with Australian consumer protection laws, banking regulations, and state-specific requirements, including mandatory disclosure obligations and cooling-off periods. The agreement typically includes comprehensive details about the guaranteed obligations, enforcement mechanisms, guarantor protections, and circumstances for release or termination. It's particularly crucial in business lending, property transactions, and corporate finance, where personal or corporate guarantees are often required to secure financial obligations.

1. Parties: Identifies all parties to the agreement including the Guarantor(s), Creditor, and Principal Debtor

2. Background: Explains the context of the guarantee, including details of the primary debt or obligation being guaranteed

3. Definitions: Defines key terms used throughout the agreement for clarity and legal certainty

4. Scope of Guarantee: Details the exact obligations being guaranteed and the extent of the guarantor's liability

5. Guarantor's Obligations: Specifies the primary obligations of the guarantor, including payment terms and conditions

6. Nature of Guarantee: Establishes whether the guarantee is continuing, limited, or specific, and whether it's joint and several

7. Representations and Warranties: Statements made by the guarantor about their capacity and authority to enter into the agreement

8. Indemnity: The guarantor's agreement to indemnify the creditor against losses related to the principal debtor's default

9. Enforcement: Procedures and rights for enforcing the guarantee, including any preconditions

10. Preservation of Rights: Confirms the creditor's rights are preserved despite various circumstances that might otherwise affect them

11. Payments: Details how and when payments must be made, including provisions for recovery of costs

12. Termination: Conditions under which the guarantee can be terminated or released

13. General Provisions: Standard contractual provisions including governing law, notices, and amendments