Guarantee Promissory Note for Germany

Guarantee Promissory Note Template for Germany

A Guarantee Promissory Note under German law (Garantieschein) is a formal unilateral declaration document where a guarantor makes an unconditional promise to pay a specified sum or perform specific obligations for the benefit of a designated beneficiary. This instrument, governed by the German Civil Code (BGB) and relevant commercial laws, serves as a binding guarantee commitment that is independent of the underlying obligation. The document must meet specific formal requirements under German law and typically includes detailed terms regarding the scope of the guarantee, payment conditions, and validity period.

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What is a Guarantee Promissory Note?

The Guarantee Promissory Note (Garantieschein) is a crucial financial instrument in German commercial practice, commonly used to provide security for business transactions, construction projects, and financial obligations. This document type is specifically designed to create a binding, unconditional promise by the guarantor to pay or perform, independent of the underlying obligation. It differs from a simple guarantee in that it combines elements of both a guarantee and a promissory note, offering enhanced protection for the beneficiary. The document is governed by German law, particularly the Civil Code (BGB) and Commercial Code (HGB), and requires careful drafting to ensure enforceability. It's frequently used in scenarios where strong payment security is needed, such as in international trade, construction projects, or significant commercial transactions.

What sections should be included in a Guarantee Promissory Note?

1. Header and Date: Formal identification of the document as a Guarantee Promissory Note (Garantieschein) and date of issuance

2. Guarantor Details: Full legal name, address, and if applicable, company registration details of the guarantor(s)

3. Beneficiary Details: Full legal name and address of the guarantee beneficiary

4. Guaranteed Obligation: Clear description of the primary obligation being guaranteed, including amount, currency, and reference to underlying agreement

5. Guarantee Declaration: Express and unconditional promise to pay or perform, including the specific scope of the guarantee

6. Payment Terms: Conditions and procedure for calling on the guarantee, including payment deadline and method

7. Duration: Validity period of the guarantee, including effective date and expiry conditions

8. Governing Law: Express confirmation of German law as governing law

9. Signature Block: Space for guarantor's legally binding signature, including any required company stamps or seals

What sections are optional to include in a Guarantee Promissory Note?

1. Multiple Guarantors Clause: Required when there are multiple guarantors, specifying joint and several liability

2. Assignment Clause: Include when the guarantee rights need to be transferable to third parties

3. Demand Requirements: Specific formal requirements for making a valid demand under the guarantee

4. Counter-indemnity: Include in commercial contexts where the guarantor requires indemnification from the principal debtor

5. Reduction Clause: Include when the guarantee amount should reduce progressively based on certain conditions

6. Notice Requirements: Include when specific notification procedures need to be followed

7. Tax Provisions: Required when tax implications need to be addressed explicitly

What schedules should be included in a Guarantee Promissory Note?

1. Underlying Agreement Details: Copy or extract of the principal agreement being guaranteed

2. Demand Format: Template for making a valid demand under the guarantee

3. Payment Schedule: If applicable, schedule of guarantee amount reductions or payment terms

4. Authority Documents: Copies of power of attorney or corporate authorizations for issuing the guarantee

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Germany

Publisher

Genie AI

Document Type

Promissory Note

Sector

Banking

Cost

Free to use
Relevant Industries

Banking & Financial Services

Construction & Infrastructure

International Trade

Manufacturing

Real Estate

Insurance

Retail & Commercial

Energy & Utilities

Transportation & Logistics

Professional Services

Relevant Teams

Legal

Finance

Treasury

Risk Management

Commercial

Credit Control

Compliance

Corporate Finance

Project Finance

Banking Operations

Relevant Roles

Legal Counsel

Finance Director

Risk Manager

Treasury Manager

Commercial Director

Contract Manager

Credit Manager

Chief Financial Officer

Banking Relationship Manager

Corporate Finance Manager

Compliance Officer

Project Finance Manager

Industries
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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