Guarantee of Payment for Ongoing Supplies of Services (Limited)
This Guarantee of Payment for Ongoing Supplies of Services (Limited) is designed for use where a supplier provides services or works on an ongoing basis on credit to a business customer, i.e. it is not a “one off” order/agreement for particular services, works or a project. It can be used where the supplier is only prepared to provide credit for an ongoing supply of services or works if the supplier has an ongoing guarantee of payment for those services or works from a third party, i.e. if a third party assumes liability for the business 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 services or works 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 works or services 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 where the supplier is supplying services or works on an ongoing (not a “one off”) basis. If instead the details of the services, work or project and the price are specified in an order/agreement, the guarantee will need to cover that one off supply, and so the supplier should instead use the accompanying Guarantee of Payment for an Order for Services (Limited).
Both this Guarantee of Payment for Ongoing Supplies of Services (Limited) and the Guarantee of Payment for an Order of Services (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 for Services (Unlimited) or the form of Guarantee of Payment for Ongoing Supplies of Services (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 business 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 business 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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