Guarantee And Indemnity Agreement Template for United Arab Emirates

The Guarantee and Indemnity Agreement is a crucial legal instrument in UAE commercial and financial transactions, commonly used to secure obligations in various business contexts. This document is essential when one party seeks additional security for the performance of obligations by another party, typically in lending arrangements, commercial contracts, or corporate group structures. The agreement combines two distinct legal concepts under UAE law: a guarantee (regulated by Articles 1056-1106 of the UAE Civil Code) and an indemnity. The document is particularly relevant in the UAE's business environment, where cross-border transactions and complex commercial arrangements often require robust security structures. It includes detailed provisions on the scope of guaranteed obligations, enforcement mechanisms, and the guarantor's responsibilities, all tailored to comply with UAE legal requirements and commercial practices.

1. Parties: Identifies and defines the Guarantor, the Beneficiary, and the Principal Debtor (the party whose obligations are being guaranteed)

2. Background: Sets out the context of the guarantee, including reference to the principal agreement or obligations being guaranteed

3. Definitions and Interpretation: Defines key terms used throughout the agreement and establishes interpretation principles

4. Guarantee: The primary guarantee obligations, including the scope and nature of the guaranteed obligations

5. Indemnity: The indemnity provisions, establishing the guarantor's obligation to indemnify the beneficiary

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

7. Preservation of Rights: Provisions ensuring the guarantee remains valid despite various events or changes

8. Payments: Details of how and when payments under the guarantee must be made, including currency and payment mechanics

9. Representations and Warranties: Guarantor's confirmations regarding their capacity and authority to enter into the guarantee

10. Costs and Expenses: Allocation of costs related to the preparation and enforcement of the guarantee

11. Notices: Communication procedures between parties

12. Assignment and Transfer: Rights and restrictions regarding transfer of rights under the guarantee

13. Governing Law and Jurisdiction: Specifies UAE law as governing law and establishes jurisdiction for disputes