Suretyship Agreement for the United Kingdom

Suretyship Agreement Template for United States

A Suretyship Agreement is a legally binding contract under U.S. law where one party (the surety) agrees to be liable for the debt, default, or failure of another party (the principal debtor) to a third party (the creditor). This agreement creates a three-party relationship governed by both federal and state laws, including the Uniform Commercial Code and state-specific suretyship statutes. The document outlines the scope of the guarantee, payment terms, conditions for default, and rights of all parties involved.

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What is a Suretyship Agreement?

The Suretyship Agreement is essential in situations where additional security is required for commercial or personal obligations. This document type is commonly used in the United States when a creditor seeks assurance beyond the principal debtor's promise to pay or perform. The agreement explicitly defines the surety's obligations, conditions for liability, and rights of all parties. Federal and state laws, including the Uniform Commercial Code, govern these agreements, and they must typically be in writing to be enforceable. A well-drafted Suretyship Agreement helps manage risk and provides clear procedures for enforcement of obligations.

What sections should be included in a Suretyship Agreement?

1. Parties: Identification of the Surety, Principal Debtor, and Creditor

2. Background: Context of the underlying obligation and reason for suretyship

3. Definitions: Key terms used throughout the agreement including 'Guaranteed Obligations', 'Principal Debt', 'Event of Default'

4. Scope of Guarantee: Extent of surety's obligations and limitations, including maximum liability amount

5. Payment Terms: Conditions and procedures for payment upon default, including timing and method of payment

6. Duration: Term of the suretyship and conditions for termination or expiry

7. Rights and Obligations: Detailed responsibilities of all parties, including reporting requirements and maintenance of financial condition

8. Default Provisions: Consequences and procedures in case of default, including notice requirements

9. Governing Law: Applicable jurisdiction and legal framework governing the agreement

What sections are optional to include in a Suretyship Agreement?

1. Collateral Requirements: Additional security requirements, including type of collateral and maintenance obligations

2. Multiple Sureties: Provisions for multiple sureties and their relationship, including joint and several liability terms

3. Assignment Rights: Terms for transferring rights under the agreement and any restrictions on assignment

4. Insurance Requirements: Specific insurance obligations and minimum coverage requirements

What schedules should be included in a Suretyship Agreement?

1. Schedule A - Principal Obligation: Details of the underlying obligation being guaranteed, including amount, interest rates, and payment terms

2. Schedule B - Payment Terms: Detailed payment schedules and conditions for both principal debt and surety obligations

3. Schedule C - Collateral Description: Detailed description of any collateral securing the obligation, including valuation and maintenance requirements

4. Appendix 1 - Notice Requirements: Specific procedures and timeframes for giving notice under the agreement

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

United States

Publisher

Genie AI

Document Type

Agreement Contract

Cost

Free to use
Clauses
Industries

Statute of Frauds: State-specific laws requiring suretyship agreements to be in writing, containing essential terms and signed by the surety. Falls under UCC ยง 1-206 and state-specific statutes.

Uniform Commercial Code (UCC): Key provisions under Article 3 (Negotiable Instruments) and Article 1 (General Provisions), particularly relevant for commercial suretyship arrangements.

State-Specific Suretyship Laws: Individual state legislation governing suretyship, including rights and obligations of sureties, notice requirements, and discharge provisions.

Fair Debt Collection Practices Act (FDCPA): Federal legislation governing debt collection practices, particularly relevant if the suretyship involves consumer debt.

Consumer Protection Laws: State and federal consumer protection statutes, especially relevant if the principal debtor is a consumer.

Contract Law Principles: Fundamental contract law including consideration requirements, capacity to contract, formation rules, and defenses to enforcement.

Bankruptcy Code: Federal bankruptcy laws affecting surety's obligations and rights in case of principal debtor's bankruptcy proceedings.

State Property Laws: Laws relating to security interests and real property regulations if real estate is involved in the suretyship agreement.

Equal Credit Opportunity Act (ECOA): Federal legislation governing credit transactions and non-discrimination requirements in suretyship arrangements related to credit.

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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