Suretyship Agreement for Nigeria

Suretyship Agreement Template for Nigeria

A comprehensive legal document governed by Nigerian law that establishes a three-party relationship where one party (the surety) guarantees the performance or payment obligations of another party (the principal debtor) to a third party (the creditor). This agreement is structured to comply with Nigerian contract law requirements and includes specific provisions for enforcement under Nigerian jurisdiction. The document details the scope of the guarantee, conditions for calling upon the surety, rights and obligations of all parties, and enforcement mechanisms, while incorporating relevant provisions from Nigerian commercial law and banking regulations.

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What is a Suretyship Agreement?

The Suretyship Agreement is a crucial legal instrument in Nigerian business and financial transactions, commonly used when additional security is required for loans, contracts, or other obligations. This document becomes necessary when a creditor requires additional assurance beyond the principal debtor's commitment, particularly in high-value transactions or when dealing with parties with limited credit history. The agreement must comply with Nigerian contract law and financial regulations, including requirements for writing and execution. It typically includes detailed provisions about the nature and extent of the surety's obligations, enforcement procedures, and the relationship between all parties. The document is particularly relevant in commercial lending, property transactions, and major business contracts where financial security is paramount.

What sections should be included in a Suretyship Agreement?

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

2. Background: Explains the context of the principal debt and the reason for the suretyship arrangement

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

4. Surety's Obligations: Details the specific obligations and commitments of the surety, including the scope of guaranteed obligations

5. Nature of Liability: Specifies whether the surety's liability is primary or secondary, and whether it's joint and several

6. Duration of Guarantee: Specifies the term of the suretyship and any conditions for termination

7. Creditor's Rights: Outlines the creditor's rights against the surety, including enforcement mechanisms

8. Preservation of Rights: Ensures creditor's rights against surety remain despite variations to principal debt or extensions

9. Representations and Warranties: Statements of fact and assurances given by the surety regarding their capacity and authority

10. Demand and Payment: Procedures for making demands under the suretyship and payment requirements

11. Governing Law and Jurisdiction: Specifies Nigerian law as governing law and establishes jurisdiction for disputes

12. Notices: Specifies how formal communications between parties should be made and delivered

13. Execution: Formal signing section with necessary attestation requirements

What sections are optional to include in a Suretyship Agreement?

1. Corporate Authority: Required when surety is a corporate entity, detailing board resolutions and authority to act

2. Counter-Indemnity: Optional section where surety obtains indemnity from the principal debtor

3. Security: Include when specific assets are pledged as additional security for the suretyship

4. Assignment: Include if rights under the suretyship may be assigned to third parties

5. Multiple Sureties: Required when more than one surety is involved, defining relationship between co-sureties

6. Limitation of Liability: Optional cap on surety's liability if not covering entire principal debt

7. Force Majeure: Include if parties want to address impact of extraordinary events on obligations

8. Costs and Expenses: Optional detailed provisions about who bears various costs related to the suretyship

What schedules should be included in a Suretyship Agreement?

1. Schedule 1 - Principal Obligations: Details of the underlying debt or obligations being guaranteed

2. Schedule 2 - Specific Terms of Guarantee: Any specific terms, conditions, or limitations of the suretyship

3. Schedule 3 - Form of Demand: Prescribed format for making demands under the suretyship

4. Schedule 4 - Security Details: If applicable, details of any security or collateral provided

5. Appendix A - Corporate Authorization Documents: If applicable, copies of relevant board resolutions and authorizations

6. Appendix B - Principal Debt Agreement: Copy of the underlying agreement creating the principal debt

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

Nigeria

Publisher

Genie AI

Document Type

Agreement Contract

Cost

Free to use
Relevant Industries

Banking and Financial Services

Real Estate and Property Development

Construction

Manufacturing

Oil and Gas

Telecommunications

Retail and Commerce

Agriculture

Infrastructure Development

Professional Services

Relevant Teams

Legal

Finance

Risk Management

Compliance

Corporate Secretariat

Credit Analysis

Treasury

Commercial Operations

Business Development

Contract Administration

Relevant Roles

Legal Counsel

Finance Director

Credit Risk Manager

Commercial Director

Compliance Officer

Corporate Secretary

Business Development Manager

Contract Manager

Chief Financial Officer

Risk Assessment Officer

Treasury Manager

Banking Relationship Manager

Senior Legal Associate

Credit Analysis 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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