The Commercial Guaranty Agreement is a crucial risk management tool in English and Welsh commercial transactions. It is commonly used when a creditor requires additional security beyond the principal debtor's covenant, particularly in situations involving substantial financial commitments, property leases, or major commercial contracts. The agreement details the scope of guaranteed obligations, enforcement mechanisms, and the circumstances under which the guarantee can be called upon. This document must be carefully drafted to ensure compliance with English law requirements, including the Statute of Frauds 1677 and relevant common law principles.

1. Parties: Identifies and defines the Guarantor, Creditor, and Principal Debtor

2. Background: Explains the context and purpose of the guarantee

3. Definitions: Defines key terms used throughout the agreement including Guaranteed Obligations

4. Guarantee and Indemnity: Core obligations of the guarantor including primary and secondary obligations

5. Duration: Term of the guarantee and conditions for termination

6. Representations and Warranties: Guarantor's confirmations about their capacity and authority

7. Payment Provisions: Terms relating to payments, including timing and method

8. Enforcement: Creditor's rights and procedures for enforcement

9. Preservation of Rights: Provisions maintaining the guarantee despite changes to underlying obligations

10. Governing Law and Jurisdiction: Specifies English and Welsh law as governing law and relevant courts