Continuing Guarantee Agreement Template for United Arab Emirates

The Continuing Guarantee Agreement is a crucial financial security instrument in the UAE banking and commercial landscape. It is primarily used when a party (the guarantor) agrees to secure the ongoing financial obligations of another party (the principal debtor) to a creditor, typically a bank or financial institution. The agreement is particularly relevant in commercial financing, property development, and corporate lending scenarios where continuous security is required for revolving facilities or multiple transactions. The document must comply with UAE Federal Law No. 5 of 1985 (Civil Code) and Federal Law No. 18 of 1993 (Commercial Transactions Law), and often needs to consider Shariah compliance requirements. It includes comprehensive provisions covering the nature and extent of the guarantee, enforcement mechanisms, guarantor's representations, and specific UAE law requirements regarding guarantee obligations.

1. Parties: Identification of the Guarantor(s) and the Beneficiary (typically a bank or financial institution)

2. Background: Context of the guarantee, including details of the primary debtor and the underlying facility or obligation being guaranteed

3. Definitions: Key terms used throughout the agreement, including 'Guaranteed Obligations', 'Security', 'Event of Default', etc.

4. Guarantee and Indemnity: Core provisions detailing the guarantee obligations, including the continuing nature of the guarantee and indemnification provisions

5. Scope of Guarantee: Extent of the guaranteed obligations, including current and future debts, and any limitations

6. Nature of Guarantee: Specifications that the guarantee is continuing, irrevocable, and unconditional

7. Preservation of Rights: Provisions ensuring the guarantee remains valid despite changes to the underlying obligation or circumstances

8. Representations and Warranties: Guarantor's confirmations regarding capacity, authority, and financial condition

9. Covenants: Ongoing obligations of the Guarantor, including information provision and maintenance of financial condition

10. Payment Mechanics: Process and requirements for making payments under the guarantee

11. Discharge and Release: Conditions under which the guarantee obligations may be discharged or released

12. Enforcement: Rights and remedies of the Beneficiary upon default

13. General Provisions: Standard boilerplate clauses including notices, amendments, assignments, governing law, etc.