Personal Guarantee Promissory Note Template for Switzerland

A Personal Guarantee Promissory Note is a sophisticated financial instrument that provides you with dual layers of security when extending credit or loans. This document combines the formal promise of payment inherent in a promissory note with the additional protection of a personal guarantee, ensuring you have recourse against both the primary debtor and a guarantor if payment defaults occur.

When do you need this document?

You'll need this document when extending credit to individuals or businesses where the primary debtor's creditworthiness alone may not provide sufficient security. This is particularly common in startup financing where business owners personally guarantee company debts, property development projects where developers provide personal guarantees for construction loans, and family business arrangements where multiple family members guarantee each other's obligations. The document is also essential when banks or financial institutions require personal guarantees from company directors or shareholders as a condition of business lending.

Key legal considerations

The document must clearly specify the maximum amount of the guarantor's liability, as unlimited guarantees can be challenged under Swiss law's consumer protection provisions. You must ensure the guarantee includes specific termination clauses, as Swiss law provides guarantors with certain rights to terminate their obligations under specific circumstances. The promissory note portion must contain all mandatory elements including the unconditional promise to pay, specific amount, maturity date, and proper signatures. Additionally, you should include clear default provisions and specify whether the guarantee covers interest, costs, and legal fees in addition to the principal amount. The relationship between the primary obligation and the guarantee must be clearly defined to avoid disputes during enforcement.

Legal requirements in Switzerland

Under the Swiss Code of Obligations, personal guarantees exceeding CHF 2,000 must be in writing and include specific mandatory language acknowledging the guarantor understands their liability. The guarantee amount must be explicitly stated in figures, and the guarantor must handwrite a confirmation of the maximum amount they guarantee. For promissory notes, Swiss law requires the document include the word "promissory note" in the text, an unconditional promise to pay, and proper dating. If the guarantee is provided by a natural person for a commercial obligation, additional consumer protection provisions may apply, requiring enhanced disclosure of the guarantor's rights and obligations. The document should also comply with Swiss stamp duty requirements, which may apply depending on the amount and nature of the underlying obligation.