Personal Guarantee Promissory Note Template for England and Wales

A Personal Guarantee Promissory Note is a powerful legal document that combines the certainty of a promissory note with the security of a personal guarantee. Under England and Wales law, this document creates both an unconditional promise to pay a specific sum and personal liability that extends beyond the original debtor's obligations. You'll typically encounter this document in commercial lending, business financing, and private credit arrangements where lenders require additional security.

When do you need this document?

You'll need a Personal Guarantee Promissory Note when standard lending arrangements require enhanced security. This commonly occurs in business loan scenarios where the borrowing entity has limited assets or credit history, prompting lenders to seek personal guarantees from directors or shareholders. Private lending situations also frequently require this document, particularly when lending to family members or friends where formal security is desired. Property developers often use these documents when securing bridging finance or development funding. Additionally, you'll encounter them in vendor financing arrangements where the seller provides credit terms but requires personal security from the buyer's principals.

Key legal considerations

The document must comply with strict formal requirements under England and Wales law. The Statute of Frauds 1677 mandates that guarantees must be in writing and signed to be enforceable, making proper execution critical. Under the Bills of Exchange Act 1882, the promissory note elements must contain an unconditional promise to pay a sum certain in money, be signed by the maker, and identify the payee. You must carefully define the scope of the guarantee, specifying whether it covers principal amounts only or extends to interest, costs, and additional liabilities. The Consumer Credit Act 1974 may apply if the underlying credit arrangement involves regulated consumer credit, requiring additional disclosure and cancellation rights. Consider the Unfair Contract Terms Act 1977 when drafting exclusion clauses, as unreasonable terms may be unenforceable.

Legal requirements in England and Wales

England and Wales law imposes specific requirements that you must satisfy for enforceability. The document must be in writing and signed by the guarantor to comply with Section 4 of the Statute of Frauds 1677. The Law of Property Act 1925 governs formal requirements for property-related guarantees, including additional execution formalities if real estate security is involved. You must ensure the promissory note elements meet Bills of Exchange Act 1882 requirements, including unconditional payment promises and proper identification of parties. If the arrangement involves consumer credit, comply with Consumer Credit Act 1974 provisions regarding form, content, and consumer protection. The document should clearly identify all parties, specify payment terms, define the guarantee's scope, and include proper signature blocks. Consider whether the arrangement requires registration under the Companies Act 2006 if it creates charges over company assets.