Guaranteed Payment Agreement for Hong Kong

Guaranteed Payment Agreement Template for Hong Kong

A Hong Kong law-governed Guaranteed Payment Agreement is a legally binding document where one party (the guarantor) provides a guarantee to pay the debts or perform the obligations of another party (the principal debtor) to a third party (the beneficiary/creditor). This agreement is structured under Hong Kong's common law system and must comply with local statutory requirements, particularly the Law Amendment and Reform (Consolidation) Ordinance. The document establishes the scope of the guarantee, payment terms, enforcement mechanisms, and the rights and obligations of all parties involved, providing security for commercial transactions in Hong Kong's business environment.

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What is a Guaranteed Payment Agreement?

The Guaranteed Payment Agreement is a crucial financial security instrument in Hong Kong's commercial landscape, commonly used in various business transactions where payment assurance is required. This document is essential when a party needs additional security for payment obligations, such as in loan agreements, lease arrangements, or supply contracts. The agreement must comply with Hong Kong's legal framework, particularly regarding formal requirements for guarantees and contractual obligations. It typically includes detailed provisions on the guarantee's scope, payment terms, enforcement mechanisms, and the parties' rights and obligations. The document is particularly relevant in Hong Kong's dynamic business environment, where international trade and financial transactions frequently require robust payment security arrangements.

What sections should be included in a Guaranteed Payment Agreement?

1. Parties: Identification of all parties: the creditor (beneficiary of the guarantee), the principal debtor, and the guarantor(s)

2. Background: Context of the guaranteed payment obligation, including the underlying transaction or relationship

3. Definitions and Interpretation: Definitions of key terms and interpretation rules for the agreement

4. Guarantee and Indemnity: Core guarantee obligations, scope of the guarantee, and indemnification provisions

5. Payment Terms: Details of the guaranteed amount, payment schedule, and method of payment

6. Guarantor's Representations and Warranties: Guarantor's confirmations regarding capacity, authority, and financial condition

7. Continuing Security: Provisions establishing the guarantee as a continuing security until full discharge

8. Preservation of Rights: Creditor's rights preservation, including ability to pursue debtor and guarantor independently

9. Demands and Notices: Process for making payment demands and serving notices under the guarantee

10. Enforcement: Rights and procedures for enforcing the guarantee

11. Costs and Expenses: Allocation of costs related to preparation, enforcement, and amendments

12. General Provisions: Standard boilerplate clauses including governing law, jurisdiction, and entire agreement

What sections are optional to include in a Guaranteed Payment Agreement?

1. Security Provisions: Required when specific assets are pledged as additional security for the guarantee

2. Multiple Guarantors: Required when there are multiple guarantors, defining joint and several liability

3. Currency Provisions: Needed for cross-border transactions involving multiple currencies

4. Tax Provisions: Required when tax implications need specific addressing, particularly in cross-border situations

5. Assignment and Transfer: Needed when rights under the guarantee may need to be assigned or transferred

6. Step-In Rights: Required when the guarantor needs rights to step into the debtor's position

7. Limitation of Liability: Optional caps or limitations on the guarantor's liability, if agreed

What schedules should be included in a Guaranteed Payment Agreement?

1. Payment Schedule: Detailed schedule of guaranteed payments, including amounts and due dates

2. Guarantor Information: Detailed information about the guarantor(s), including financial statements or asset declarations

3. Form of Demand: Standard form for making demands under the guarantee

4. Security Documents: List and copies of related security documents, if applicable

5. Underlying Agreement: Copy or key terms of the underlying agreement giving rise to the guaranteed obligations

6. Conditions Precedent: List of conditions that must be satisfied before the guarantee becomes effective

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

Hong Kong

Publisher

Genie AI

Document Type

Sales Contract

Sector

Sales

Cost

Free to use
Relevant legal definitions
Relevant Industries

Banking & Financial Services

Real Estate & Property Development

Construction

International Trade

Manufacturing

Retail

Professional Services

Infrastructure

Telecommunications

Energy & Utilities

Relevant Teams

Legal

Finance

Treasury

Risk Management

Compliance

Commercial

Credit Control

Business Development

Corporate Secretarial

Operations

Relevant Roles

Chief Financial Officer

Finance Director

Legal Counsel

Corporate Lawyer

Risk Manager

Treasury Manager

Credit Manager

Commercial Director

Contract Manager

Company Secretary

Financial Controller

Compliance Officer

Business Development Director

Account Manager

Industries
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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