Parent Company Guarantee of Performance by Subsidiary Contractor (Limited)
This Parent Company Guarantee of Performance by Subsidiary Contractor (Limited) 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 the contractor’s parent 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 the parent company to sign it as guarantor, and also for the client/customer and the contractor to sign it. If the contractor fails to comply with the contract, the client/customer can then call on the parent company 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 parent company’s financial strength is sufficient to meet its potential liabilities under the guarantee. If the client/customer considers that neither the contractor nor the parent company 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.
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 Parent Company Guarantee of Performance by Subsidiary Contractor (Limited) contains a limit on the maximum amount of money for which the guarantor may be liable. If an unlimited liability is instead required then you are advised to download and use the Parent Company Guarantee of Performance by Subsidiary Contractor (Unlimited).
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