Guarantee of Payment for an Order for Services (Limited)
This Guarantee of Payment for an Order for Services (Limited) is designed for use in connection with a one off supply on credit of services, works, or a project to a business customer. It can be used where the supplier decides only to enter into the transaction if the supplier first receives a guarantee of payment for the services/project/works 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 the services/project/works, 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 business 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 for the services/project/works in full when payment is due, 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 business customer under a one off purchase order/agreement where the particular services, work or project and the price payable is specified in that order/agreement. If the supplier instead is supplying services or works on an ongoing (not a “one off”) basis, the guarantee will need to cover that ongoing supply, and so the supplier should instead use the accompanying Guarantee of Payment for Ongoing Supplies of Services (Limited).
Both this Guarantee of Payment for an Order for Services (Limited) and the form of Guarantee of Payment for Ongoing Supplies of Services (Limited) limit the maximum amount of money for which the guarantor may be liable. If unlimited liability is instead required 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 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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