Guarantee of Payment for Ongoing Supplies of Goods (Limited)
This Guarantee of Payment for Ongoing Supplies of Goods (Limited) is designed for use in connection with an ongoing trading relationship where a supplier provides goods on an ongoing basis on credit to a trade customer, i.e. it is not a “one off” order of goods. It can be used where the supplier is prepared only to provide credit for an ongoing supply of goods if the supplier has an ongoing guarantee of payment for those goods from a third party, i.e. if a third party assumes liability for the customer’s payment obligations.
The document is a legally binding document in the form of a Deed and it provides for the third party and the supplier to sign it. If the customer fails to pay for any of the goods from time to time, the supplier can then call on the guarantor under this document to do so.
The supplier might decide that such a guarantee is needed because the customer is not a good enough credit risk. The supplier will however need to be satisfied that the guarantor is a good enough credit risk. If the supplier considers that neither customer nor the guarantor can be relied upon to pay in full when payment is due for any of the goods from time to time, the supplier should consider whether some other form of security for payment can be made available by the customer.
This template may be used to guarantee the payment obligations of the customer for supply of goods from time to time. If however there is a “one off” purchase order/agreement where a particular quantity, type and price of goods are specified in that order/agreement, the guarantee will only need to cover that one off supply. In that case the supplier should instead use the accompanying Guarantee of Payment for an Order of Goods (Limited).
Both this Guarantee of Payment for Ongoing Supplies of Goods (Limited) and the Guarantee of Payment for an Order of Goods (Limited) contain a limit on the maximum amount of money for which the guarantor may be liable. If instead you require there to be no limit on liability then you are advised to download and use either the Guarantee of Payment for an Order of Goods (Unlimited) or the form of Guarantee of Payment for Ongoing Supplies of Goods (Unlimited).
The guarantor may be either an individual or a company. This document assumes that the guarantor is a director, shareholder, parent company or spouse of the trade customer. An introductory paragraph in the document contains these alternatives in square brackets so that the supplier can select the relevant option. If however the guarantor has some other (or no) connection or relationship with or interest in the trade customer, the wording can be adapted as necessary.
The template also contains other alternative clauses and/or phrases enclosed in square brackets. These should be read carefully and selected so that they are compatible with one another. Unused options should be removed from the document.
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