Suretyship Agreement Template for Hong Kong

The Suretyship Agreement is a critical legal instrument in Hong Kong's commercial landscape, commonly used to secure business obligations and financial commitments. It is particularly relevant when a creditor requires additional security beyond the principal debtor's promise to pay or perform. The document must comply with Hong Kong's contract law requirements and specific regulations governing guarantees and security arrangements. This agreement type is frequently used in various contexts, from securing bank loans and property leases to supporting trade finance and commercial contracts. The agreement typically includes detailed provisions on the scope of the guarantee, enforcement mechanisms, the surety's rights and obligations, and specific protections required under Hong Kong law. It's essential that the document clearly defines the guaranteed obligations and includes all necessary formalities to ensure enforceability, particularly given Hong Kong's strict approach to contractual interpretation and enforcement.

1. Parties: Identifies and defines the three key parties: the Creditor, Principal Debtor, and Surety

2. Background: Sets out the context of the principal debt and the purpose of the suretyship

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

4. Guarantee and Indemnity: Core section establishing the surety's primary obligations and scope of guarantee

5. Nature of Liability: Specifies whether the surety's liability is joint and several, and its relationship to the principal debt

6. Continuing Security: Establishes that the guarantee remains effective until all secured obligations are discharged

7. Preservation of Rights: Details the creditor's rights preservation and ability to take action against either debtor or surety

8. Representations and Warranties: Surety's confirmations regarding capacity, understanding, and authority to enter agreement

9. Payment Terms: Specifies how and when the surety must make payments upon default by the principal debtor

10. Discharge and Release: Conditions under which the surety's obligations may be discharged or released

11. Enforcement: Procedures and conditions for enforcing the guarantee

12. Notices: Requirements for valid notices between parties

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

14. Execution: Signature blocks and execution formalities