The Guaranteed Payment Agreement serves as a crucial financial instrument in Nigerian business transactions where payment assurance is required. This document is commonly used in scenarios ranging from large commercial contracts to financial facility agreements, providing security for payment obligations. It becomes particularly relevant in situations where a stronger financial entity guarantees the payment obligations of a less established or higher-risk entity. The agreement must comply with Nigerian financial regulations, including the Central Bank of Nigeria Act and Money Lenders Act, and typically includes detailed provisions for enforcement, default scenarios, and recovery mechanisms. It's essential in sectors requiring significant financial commitments or where payment security is paramount to business operations.

1. Parties: Identifies and defines all parties to the agreement, including the Guarantor, Principal Debtor, and Beneficiary

2. Background: Sets out the context of the agreement, including the underlying transaction or obligation being guaranteed

3. Definitions: Defines key terms used throughout the agreement

4. Guarantee and Indemnity: Core section detailing the guarantee obligations, payment terms, and indemnification provisions

5. Payment Terms: Specifies payment amounts, schedules, currency, and method of payment

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

7. Representations and Warranties: States the legal promises and factual assertions made by the parties

8. Duration and Termination: Specifies the term of the guarantee and circumstances for termination

9. Default and Remedies: Details events of default and available remedies

10. Notices: Specifies how formal communications between parties should be made

11. Governing Law and Jurisdiction: Confirms Nigerian law as governing law and specifies jurisdiction for disputes

12. Execution: Signature blocks and execution formalities