Non Financial Guarantee for the United Kingdom

Non Financial Guarantee Template for England and Wales

A Non-Financial Guarantee is a legally binding commitment under English and Welsh law where one party (the guarantor) agrees to ensure the performance of specific non-monetary obligations by another party (the principal debtor) to a third party (the beneficiary). This document provides security for performance obligations rather than financial payments, commonly used in construction, real estate, and commercial contracts where specific actions or deliverables are guaranteed.

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What is a Non Financial Guarantee?

A Non-Financial Guarantee is essential in commercial arrangements where parties seek assurance of performance rather than financial security. This document, governed by English and Welsh law, is commonly used when a party needs certainty that specific obligations will be fulfilled, such as completion of works, delivery of services, or adherence to quality standards. The Non-Financial Guarantee provides legal recourse if the principal debtor fails to perform their obligations, allowing the beneficiary to seek remedy from the guarantor. It's particularly valuable in complex commercial arrangements where monetary compensation alone may not adequately address potential breaches.

What sections should be included in a Non Financial Guarantee?

1. Parties: Identifies the guarantor, beneficiary, and principal debtor

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

3. Definitions: Defines key terms used throughout the guarantee

4. Guarantee and Indemnity: Core obligations of the guarantor

5. Scope of Guarantee: Defines what obligations are covered

6. Duration: Period of effectiveness and termination conditions

7. Enforcement: Conditions for calling upon the guarantee

What sections are optional to include in a Non Financial Guarantee?

1. Security: Additional security provisions when further security is being provided

2. Assignment: Rights to transfer the guarantee, included when transfer rights are needed

3. Multiple Guarantors: Provisions for joint and several liability when there is more than one guarantor

4. Costs and Expenses: Allocation of costs related to the guarantee when specific cost arrangements are needed

What schedules should be included in a Non Financial Guarantee?

1. Form of Demand: Template for making demands under the guarantee

2. Guaranteed Obligations: Detailed list of obligations being guaranteed

3. Principal Agreement: Copy or summary of the underlying agreement being guaranteed

4. Corporate Authorizations: Required corporate approvals and resolutions

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

England and Wales

Publisher

Genie AI

Document Type

Bank Guarantee

Sector

Banking

Cost

Free to use
Clauses
Industries

Common Law Principles: Fundamental principles including Law of Contract, established case law principles for guarantees, and doctrine of consideration

Statute of Frauds 1677: Section 4 requires guarantees to be in writing and signed by the guarantor or their authorized representative

Unfair Contract Terms Act 1977: Regulates exclusion and limitation clauses in business-to-business contracts and sets requirements for reasonableness

Consumer Rights Act 2015: Governs contracts involving consumers, establishing requirements for fairness and transparency in guarantee terms

Misrepresentation Act 1967: Addresses false statements made during the formation of the guarantee and provides remedies for misrepresentation

Third Parties (Rights Against Insurers) Act 2010: Relevant for understanding third party rights in guarantee contexts involving insurance aspects

Financial Services and Markets Act 2000: Important for ensuring the guarantee doesn't inadvertently fall within regulated financial activities

Contracts (Rights of Third Parties) Act 1999: Governs the rights of third parties to enforce terms of the guarantee when they are not direct parties to it

EU Retained Law: Post-Brexit legislation retained from EU law that may impact guarantee provisions and interpretation

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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