Document background
The Guarantee in Loan Agreement is a crucial security document in UAE financing transactions, used when a third party (guarantor) agrees to secure the loan obligations of a borrower. This document is essential in the UAE's business environment, particularly in corporate lending, project finance, and real estate financing. The guarantee must comply with UAE Federal Law No. 5 of 1985 (Civil Code) and Federal Law No. 18 of 1993 (Commercial Code), which set out specific requirements for guarantee agreements. The document typically includes detailed provisions on the scope of guaranteed obligations, enforcement mechanisms, representations and warranties, and payment obligations. It's commonly used in both conventional and Islamic financing structures, requiring careful consideration of UAE Central Bank regulations and, where applicable, Shariah compliance requirements.
