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Continuing Guaranty Agreement

Continuing Guaranty Agreement Template for Canada

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Key Requirements PROMPT example:

Continuing Guaranty Agreement

"I need a Continuing Guaranty Agreement under Canadian law for our manufacturing company to guarantee a $5 million credit facility for our subsidiary, with the guarantee to become effective from March 1, 2025, and including provisions for multiple guarantors."

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Document background
The Continuing Guaranty Agreement is a critical financial security instrument used across various Canadian business contexts where ongoing credit or financial obligations need to be guaranteed by a third party. This document is particularly relevant when establishing long-term business relationships involving credit facilities, loans, or other financial commitments. The agreement details the guarantor's obligations, the scope of the guarantee, and the rights of all parties involved. It must comply with both federal Canadian legislation and provincial laws, particularly regarding contract formation, security interests, and enforcement. The Continuing Guaranty Agreement differs from a standard guarantee in that it covers not only existing obligations but also future debts or commitments, making it particularly useful for ongoing business relationships. The document typically includes provisions for maximum liability, termination conditions, and enforcement mechanisms, all structured within the Canadian legal framework.
Suggested Sections

1. Parties: Identifies the Guarantor, the Creditor, and the Principal Debtor

2. Background: Explains the context of the guarantee, including the underlying obligations being guaranteed

3. Definitions: Defines key terms used throughout the agreement

4. Guarantee and Indemnity: Sets out the primary guarantee obligations and indemnification provisions

5. Nature of Guarantee: Specifies the continuing nature of the guarantee and its scope

6. Maximum Liability: States the maximum amount for which the guarantor may be liable

7. Payment Terms: Describes when and how payments must be made under the guarantee

8. Representations and Warranties: States the guarantor's representations regarding their capacity and authority

9. Creditor's Rights and Remedies: Outlines the rights and remedies available to the creditor

10. Preservation of Rights: Ensures the guarantee remains valid despite changes to the underlying obligation

11. Termination: Specifies how and when the guarantee can be terminated

12. Notices: Details how formal communications between parties should be made

13. Governing Law: Specifies that Canadian law governs the agreement

14. General Provisions: Includes standard boilerplate provisions like severability and amendments

Optional Sections

1. Security: Include when the guarantee is secured by specific assets or property

2. Multiple Guarantors: Include when there are multiple guarantors to specify joint and several liability

3. Subordination: Include when the guarantor's rights need to be subordinated to other creditors

4. Financial Covenants: Include when the guarantor must maintain certain financial conditions

5. Currency Provisions: Include when the guarantee involves multiple currencies

6. Assignment: Include when either party needs the right to assign the guarantee

7. Priority: Include when there are multiple guarantees or security interests that need to be ranked

8. Guarantee Commission: Include when the guarantor is to receive compensation for providing the guarantee

Suggested Schedules

1. Schedule A - Guaranteed Obligations: Details the specific obligations being guaranteed

2. Schedule B - Security Details: Lists any security or collateral provided for the guarantee

3. Schedule C - Form of Demand: Standard form for making demands under the guarantee

4. Schedule D - Existing Encumbrances: Lists any existing liens or encumbrances on guarantor's assets

5. Appendix 1 - Guarantor's Certificate: Form of certificate confirming guarantor's capacity and authority

6. Appendix 2 - Notice Details: Contact information and address for service for all parties

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Linkedin in social icon imageX social icon image
alex.den.21@genieai.co
Relevant Industries

Banking and Financial Services

Commercial Real Estate

Manufacturing

Wholesale Trade

Retail

Construction

Professional Services

Technology

Agriculture

Transportation and Logistics

Energy and Resources

Healthcare

Relevant Teams

Legal

Finance

Risk Management

Credit

Treasury

Compliance

Corporate Secretariat

Commercial Banking

Underwriting

Business Development

Relevant Roles

Chief Financial Officer

Finance Director

Credit Manager

Risk Manager

Corporate Lawyer

Legal Counsel

Commercial Banking Officer

Treasury Manager

Financial Controller

Business Development Manager

Account Manager

Compliance Officer

Corporate Secretary

Underwriting Manager

Credit Analyst

Industries
Statute of Frauds (Provincial): Requires certain contracts, including guarantees, to be in writing and signed to be enforceable. Each province has its own version.
Personal Property Security Act (PPSA): Governs the creation and enforcement of security interests in personal property, which may be relevant if the guaranty is secured.
Bankruptcy and Insolvency Act: Federal legislation that affects the enforcement of guarantees in case of bankruptcy or insolvency of the debtor or guarantor.
Interest Act: Federal legislation governing interest rates and calculations, relevant for any interest provisions in the guaranty agreement.
Provincial Consumer Protection Act: If the guaranty involves a consumer transaction, provincial consumer protection laws will apply with specific requirements and restrictions.
Limitations Act (Provincial): Sets time limits for bringing legal actions to enforce guarantees and other contractual obligations.
Civil Code of Quebec: If the guaranty involves parties or property in Quebec, the Civil Code provisions regarding suretyship (guarantees) must be considered.
Business Corporations Act (Federal and Provincial): Relevant when the guarantor is a corporation, governing corporate authority to provide guarantees.
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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