Loan Guarantor Agreement Template for Saudi Arabia

The Loan Guarantor Agreement is a crucial document in Saudi Arabian financial transactions, used when a third party agrees to guarantee the repayment obligations of a borrower. This agreement must be carefully structured to comply with both Saudi civil and commercial laws, as well as Sharia principles, particularly regarding the concepts of Kafala (guarantee) and the prohibition of Riba (usury). The document is essential in various commercial contexts, from corporate financing to personal loans, and requires careful consideration of Saudi Arabian Monetary Authority (SAMA) regulations and Islamic banking requirements. The agreement typically includes detailed provisions about the scope of the guarantee, enforcement mechanisms, and the rights and obligations of all parties involved, while ensuring that all terms remain compliant with local laws and religious principles.

1. Parties: Identification of the Guarantor, Principal Debtor, and Beneficiary (Creditor)

2. Background: Context of the underlying loan agreement and the purpose of the guarantee

3. Definitions: Key terms used throughout the agreement, including 'Guaranteed Obligations', 'Security', and 'Event of Default'

4. Guarantee and Indemnity: Core guarantee obligations, scope of the guarantee, and indemnification provisions

5. Nature of Guarantee: Specification that the guarantee is unconditional, irrevocable, and continuing

6. Guarantor's Representations and Warranties: Confirmations regarding capacity, authority, and financial condition of the Guarantor

7. Payment Mechanics: Process and timing for payments under the guarantee, including currency and payment method

8. Preservation of Rights: Creditor's rights preservation and actions that don't affect the guarantee

9. Compliance with Sharia: Explicit confirmation of Sharia compliance and relevant principles

10. Events of Default: Circumstances triggering immediate enforcement of the guarantee

11. Enforcement and Remedies: Rights and procedures for enforcing the guarantee

12. Notices: Communication procedures between parties

13. Governing Law and Jurisdiction: Confirmation of Saudi law governance and jurisdiction of Saudi courts