Guaranty And Security Agreement Template for India

The Guaranty and Security Agreement is a fundamental document in Indian secured financing transactions, combining two critical elements of credit enhancement: personal guarantees and asset security. It is typically used when a lender requires both a guarantee of payment from a third party and security over specific assets to secure the underlying obligations. The agreement must comply with Indian law, particularly the Indian Contract Act, 1872, for guarantee provisions, and various security laws including the Transfer of Property Act and SARFAESI Act for security creation and enforcement. This document is essential in various scenarios, including corporate financing, project finance, and general secured lending, where the lender seeks multiple layers of protection for the credit exposure. The agreement details the scope of guaranteed obligations, creation and perfection of security interests, enforcement mechanisms, and the interplay between the guarantee and security components.

1. Parties: Identifies the guarantor, secured party (beneficiary), and principal debtor

2. Background: Describes the underlying transaction or facility being guaranteed and secured, and the purpose of the agreement

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

4. Guarantee: Sets out the scope and nature of the guarantee obligations, including primary obligations and limitations

5. Security Interest Creation: Creates and establishes the security interest over the secured assets

6. Representations and Warranties: Standard and security-specific representations by the guarantor regarding capacity, title to assets, and other material matters

7. Covenants: Positive and negative obligations of the guarantor regarding the secured assets and guarantee obligations

8. Events of Default: Circumstances that trigger enforcement rights and remedies

9. Enforcement Rights and Remedies: Details the secured party's rights upon default, including asset seizure and sale

10. Power of Attorney: Grants power to the secured party to perfect and enforce security interests

11. Expenses and Indemnity: Provisions for costs, expenses, and indemnification obligations

12. Notices: Communication procedures between parties

13. Governing Law and Jurisdiction: Specifies Indian law as governing law and jurisdiction for disputes

14. Miscellaneous: Standard boilerplate provisions including amendments, waivers, and severability