Memorandum of Understanding (Loan Guarantee Agreement)
This Memorandum of Understanding (Loan Guarantee Agreement) (“MOU”) is designed to be signed as a preliminary non-binding heads of terms document. This MOU would then be followed by a binding detailed, definitive Loan Guarantee Agreement under which the guarantor guarantees that the borrower will repay the lender. This MOU template assumes that the borrower, lender and guarantor are all business entities.
The data protection provisions in this document have been updated with reference to the UK GDPR.
Using an MOU such as this should help prevent misunderstandings. It should also aid the process of focusing on and agreeing all of the important legal and commercial points that need to be dealt with by the definitive, binding, Loan Guarantee Agreement which is to follow the MOU.
This template contains optional clauses (and alternative provisions within them) from which you can select as appropriate. This menu of heads of terms can serve as a convenient checklist to assist you to identify, negotiate and record in the MOU all of the points that should be covered by the parties in a full agreement. Once both parties have agreed and signed the MOU, you can pass it to your legal advisers as your instructions to them. Their task of drafting a definitive binding Loan Guarantee Agreement should be quicker and easier if they have such a detailed MOU to work from, and hopefully that will be reflected in lower legal fees.
Before using this MOU template, we recommend that you read the Guidance Notes on Heads of Terms, Memoranda of Understanding, Letters of Intent and Term Sheets in this subfolder. Those notes deal with a number of important general issues relating to all Memoranda of Understanding, Heads of Terms, Letters of Intent, Term Sheets and similar pre-contract documents.
For fully drafted template agreements, see:
- the Guarantee & Indemnity Agreements subfolder for forms of guarantee of payment for goods, payment for services and performance of a contract; and
- the Loan Guarantees and Indemnities subfolder in the Corporate folder for forms of loan guarantee and indemnity
This document is in open format. Either enter the requisite details in the highlighted fields or adjust the wording to suit your purposes.
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