Guarantees and Indemnities

Guarantee and Indemnity Agreements

It may desirable in relation to a particular transaction for a supplier or customer to obtain from the other contracting party a third party to guarantee the obligations of that party. In certain cases, the supplier or customer may decide that it will not enter into the transaction unless the other party provides a guarantor.  

For example, where a supplier of goods or services wishes to deal with a business customer on credit terms, the supplier could be concerned that the customer may not pay, or be able to pay, some or all of the amounts due for the goods or services. Where the supplier considers that this poses too great a credit risk, the supplier could make it a condition of supplying the customer that an acceptable third party provides a guarantee for payment of price of the goods or services.

A third party guarantor could also be required by a client or customer where it is concerned that the contractor or consultant that it engages to carry out services or works may fail to fully and correctly carry out the services or works as required by the contract. It could also be concerned that the contractor or consultant may fail to meet its liabilities for defaulting under the contract. 

The Guarantee and Indemnity documents included in this subfolder provide a variety of guarantees covering payment or performance in different situations. They include guarantee documents to be used for supply of goods, supply of services, or carrying out projects, in both one off transactions or ongoing supply. In each case there is an option for either a limited guarantee or an unlimited guarantee. The documents provide for guarantors with different types of relationship with the person or entity whose payment or performance obligations are to be guaranteed.

There are also template letters which can be used when calling on the guarantor under any of the guarantee documents in this subfolder.

The particular template to be used should be selected carefully taking into account the requirements of the contracting parties and the best interests of all concerned.

This subfolder does not also include any documents under which a person or company agrees to guarantee to a lender that the borrower will repay any amount/s borrowed from the lender. However guarantee documents relating to repayment of borrowings can be found in the Loan Guarantee & Indemnities subfolder in the Loan & Finance Documents Group in our Corporate folder.

These Guarantee + Indemnity documents are part of the Business Documents Folder. Just £35.00 + VAT will provide you with 1 year's unlimited access to all/any documents from the Business Folder.

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