Personal Guarantee Letter Template for England and Wales

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Key Requirements PROMPT example:

Personal Guarantee Letter

"I need a Personal Guarantee Letter for our company director to guarantee a £500,000 business loan from ABC Bank, with the guarantee period starting from March 2025 and lasting for 5 years."

What is a Personal Guarantee Letter?

Personal Guarantee Letters are commonly used in business and financial transactions under English and Welsh law when additional security is required for a debt or obligation. The document serves as a formal commitment by a guarantor to assume responsibility for a principal debtor's obligations if they default. A Personal Guarantee Letter typically includes details of all parties involved, the scope of guaranteed obligations, maximum liability, and duration of the guarantee. It's particularly important in lending situations where the creditor requires additional assurance beyond the principal debtor's covenant.

What sections should be included in a Personal Guarantee Letter?

1. Guarantor Details: Full name, address, and contact information of the guarantor

2. Creditor Details: Full name, address, and contact information of the creditor

3. Principal Debtor Details: Details of the person/entity whose obligations are being guaranteed

4. Guaranteed Obligations: Clear description of the obligations being guaranteed, including the maximum amount or specification that it's unlimited

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

6. Governing Law: Specification that the guarantee is governed by the laws of England and Wales

What sections are optional to include in a Personal Guarantee Letter?

1. Security Provisions: Details of any security provided by the guarantor, used when guarantee is secured against specific assets

2. Joint and Several Liability: Required when multiple guarantors are involved in providing the guarantee

3. Indemnity Provisions: Additional protection for creditor beyond guarantee, including indemnification against losses

4. Assignment Rights: Provisions regarding the ability to assign or transfer the guarantee to other parties

What schedules should be included in a Personal Guarantee Letter?

1. Schedule of Guaranteed Obligations: Detailed list of specific obligations covered by the guarantee

2. Schedule of Security: Detailed list of any assets provided as security for the guarantee (if applicable)

3. Schedule of Notices: Format and addresses for serving notices under 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

Industries

Statute of Frauds 1677: Fundamental legislation requiring guarantees to be in writing and signed by the guarantor or their authorized representative. The document must contain all essential terms of the guarantee.

Contracts (Rights of Third Parties) Act 1999: Legislation governing whether and how third parties can enforce rights under the guarantee agreement.

Consumer Credit Act 1974: Applies when the guarantor is an individual and the guarantee relates to consumer credit. Imposes specific formalities and notice requirements.

Unfair Contract Terms Act 1977: Regulates the enforceability of contract terms, particularly exclusion clauses, and implements a reasonableness test for terms.

Consumer Rights Act 2015: Applies when the guarantor is acting as a consumer, imposing fairness requirements for contract terms and providing consumer protections.

Financial Services and Markets Act 2000: Relevant when the guarantee relates to regulated financial activities, imposing additional regulatory requirements.

Common Law Principles: Essential legal principles including rules of consideration, contractual interpretation, doctrine of undue influence, and rules regarding misrepresentation.

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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