Joint Guarantee Agreement Template for Hong Kong

A Joint Guarantee Agreement governed by Hong Kong law is a formal legal document where multiple parties (guarantors) jointly agree to guarantee the obligations of a principal debtor to a creditor. The agreement creates a binding commitment where each guarantor assumes joint and several liability for the guaranteed obligations, meaning the creditor can pursue any or all guarantors for the full amount owed. This document type is particularly important in Hong Kong's financial sector and follows Hong Kong's common law principles while incorporating specific local statutory requirements and commercial practices.

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What is a Joint Guarantee Agreement?

The Joint Guarantee Agreement is essential in commercial and financial transactions where additional security is required for obligations. It is commonly used in Hong Kong for various purposes, including securing bank facilities, commercial loans, and business obligations. The document establishes the scope of guaranteed obligations, defines the nature of the guarantors' liability, and includes provisions for enforcement under Hong Kong law. This agreement type is particularly relevant given Hong Kong's status as a major financial center, where complex financing arrangements often require robust security structures. The document typically includes detailed provisions on the guarantors' obligations, enforcement mechanisms, and creditor's rights, while ensuring compliance with Hong Kong's legal framework and commercial practices.

What sections should be included in a Joint Guarantee Agreement?

1. Parties: Identification of the guarantors, creditor, and principal debtor

2. Background: Context of the guarantee, reference to the principal agreement or facility being guaranteed

3. Definitions and Interpretation: Key terms used in the agreement and rules for interpretation

4. Guarantee and Indemnity: Core guarantee obligations and indemnity provisions

5. Joint and Several Liability: Provisions establishing joint and several liability among guarantors

6. Scope of Guarantee: Extent of guaranteed obligations and any limitations

7. Continuing Security: Confirmation that the guarantee is continuing and covers all obligations

8. Representations and Warranties: Guarantors' confirmations regarding capacity, authority, and understanding

9. Preservation of Rights: Creditor's rights preservation and independence from other security

10. Payments: Payment obligations, mechanics, and currency provisions

11. Discharge and Release: Conditions for discharge of guarantee obligations

12. Expenses and Indemnity: Cost allocation and indemnification obligations

13. Notices: Communication procedures and contact details

14. Governing Law and Jurisdiction: Hong Kong law as governing law and jurisdiction provisions

What sections are optional to include in a Joint Guarantee Agreement?

1. Security Provisions: Required when guarantors provide additional security for their obligations

2. Subordination: Needed when there are multiple creditors or inter-creditor arrangements

3. Interest Provisions: Detailed interest terms when specific interest arrangements apply

4. Set-off Rights: Specific set-off provisions when parties have multiple relationships

5. Assignment and Transfer: Required when transfer rights need to be specifically addressed

6. Information Covenants: When ongoing information requirements are imposed on guarantors

7. Tax Gross-up: Required when tax implications need specific addressing

8. Currency Indemnity: Needed for cross-border transactions with currency exposure

What schedules should be included in a Joint Guarantee Agreement?

1. Schedule 1 - Guaranteed Obligations: Detailed description of the obligations being guaranteed

2. Schedule 2 - Guarantor Information: Detailed information about each guarantor including addresses and notice details

3. Schedule 3 - Principal Agreement: Copy or key terms of the underlying agreement being guaranteed

4. Schedule 4 - Guarantee Limit: If applicable, specific limits on guarantee amounts for each guarantor

5. Schedule 5 - Security Details: If applicable, details of any security provided by guarantors

6. Appendix A - Form of Demand: Standard form for making demands under the guarantee

7. Appendix B - Compliance Certificates: Standard forms for any required compliance certificates

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

Jurisdiction

Hong Kong

Publisher

Genie AI

Document Type

Account Agreement

Sector

Banking

Cost

Free to use

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