Payment Guarantee for a Supply of Goods (Limited)

Guarantee of Payment for an Order of Goods (Limited)

BS.GI.10

This Guarantee of Payment for an Order of Goods (Limited) is designed for use in connection with a one off supply of goods on credit to a trade customer. It can be used where the supplier decides only to enter into a sale of goods transaction if the supplier first receives a guarantee of payment for the 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 the goods, 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 for the goods 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 customer under a one off purchase order/agreement where a particular quantity and type of goods and the price of the goods are specified in that order/agreement. If the supplier instead is supplying goods 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 Goods (Limited).

Both this Guarantee of Payment for an Order of Goods (Limited) and the form of Guarantee of Payment for Ongoing Supplies of Goods (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 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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