Guarantee of Contractor Performance by Director of Contractor (Unlimited)
This Guarantee of Contractor Performance by Director of Contractor (Unlimited) is designed for use in connection with a contract under which a contractor company carries out a particular project, or set of works or services for a client/customer. It can be used where the client/customer decides only to enter into a contract with the contractor if the client/customer first receives a performance guarantee from a director of the contractor company, i.e. a guarantee that the contractor will carry out and complete the project, works or services in accordance with the contract.
The document is a legally binding document in the form of a Deed and it provides for a director (or other individual) to sign it as guarantor, and also for the client/customer and the contractor company to sign it. If the contractor fails to comply with the contract, the client/customer can then call on the director (or other) guarantor under this document to put right the failure and/or compensate the client/customer for the failure.
The client/customer might ask for such a guarantee where it is concerned that if the contractor fails to perform the contract, the contractor’s financial resources will not be sufficient to meet its liabilities to the client/customer under the contract. The client/customer will however need to be satisfied that the director’s (or other guarantor individual’s) financial strength is sufficient to meet its potential liabilities under the guarantee. If the client/customer considers that neither the contractor nor the guarantor can be relied upon to meet the performance obligations under the contract, the client/customer should consider whether some other form of security for performance can be made available by the contractor or guarantor.
It is possible to adapt this template (by rewording references to the guarantor being a “director” of the contractor) to provide for some other individual to act as guarantor. The guarantor might instead be someone who does not have a connection with or interest in the contractor company, or has only an indirect or small interest, e.g. someone who is a minority shareholder, or is the spouse, partner, parent, child, or sibling of either a director or of the main/sole shareholder, or someone who has loaned money to the contractor which is still outstanding or is a supplier on credit to the contractor.
This template is only intended for a “one off” project or set of works/services, not for any arrangements under which the contractor and client/customer from time to time agree on works/services which are not identified at the time when the guarantee is signed. If any further works/services are later agreed on, a further guarantee covering those further works/services should then be signed.
This Guarantee of Contractor Performance by Director of Contractor (Unlimited) does not contain any limit on the maximum amount of money for which the guarantor may be liable. If a limited liability is instead required then you are advised to download and use the Guarantee of Contractor Performance by Director of Contractor (Limited).
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