Guaranty Agreement Template for United Arab Emirates

The Guaranty Agreement is a crucial legal instrument in UAE business and financial transactions, used to provide additional security for contractual obligations. This document, governed by UAE law, particularly Federal Law No. 5 of 1985 (Civil Code) and Federal Law No. 18 of 1993 (Commercial Code), is commonly utilized in various contexts including loan facilities, construction projects, commercial transactions, and corporate finance arrangements. The agreement outlines the guarantor's commitment to fulfill the principal debtor's obligations if they default, specifying the scope of the guarantee, conditions for enforcement, and rights of all parties involved. It must comply with UAE legal requirements regarding form, content, and execution, particularly concerning the specification of the guaranteed amount and the nature of the guaranteed obligations.

1. Parties: Identification of the Guarantor, the Beneficiary (creditor), and reference to the Principal Debtor

2. Background: Context of the guarantee, reference to the principal debt/obligation, and the relationship between the parties

3. Definitions: Key terms used throughout the agreement, including 'Guaranteed Obligations', 'Principal Debt', 'Security', etc.

4. Guarantee and Indemnity: Core guarantee obligations, including the scope of guaranteed obligations and indemnification provisions

5. Nature of Guarantee: Specification that the guarantee is continuing, irrevocable, and unconditional as permitted under UAE law

6. Guarantor's Representations and Warranties: Fundamental statements about the Guarantor's capacity, authority, and financial condition

7. Payment Mechanics: Procedures and requirements for making payments under the guarantee, including currency and payment method

8. Preservation of Rights: Provisions ensuring the guarantee remains valid despite variations to the underlying obligation or other circumstances

9. Enforcement: Rights and procedures for enforcing the guarantee, including any notice requirements

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

11. Communications: Notice provisions and contact details for formal communications

12. Governing Law and Jurisdiction: Specification of UAE law as governing law and jurisdiction for disputes