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Personal Guaranty Agreement

Personal Guaranty Agreement Template for Canada

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Key Requirements PROMPT example:

Personal Guaranty Agreement

"I need a Personal Guaranty Agreement where the company owner personally guarantees a $500,000 business loan from ABC Bank to their startup tech company, with the guarantee limited to the principal amount plus interest and enforcement costs."

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Document background
The Personal Guaranty Agreement is a fundamental legal instrument in Canadian business and financial transactions, commonly used when additional security is required for loans, leases, or other financial obligations. This document becomes necessary when a creditor requires additional assurance beyond the principal debtor's commitment, typically in situations involving business loans, commercial leases, or significant financial transactions. The agreement must comply with Canadian federal legislation and provincial requirements, including the Statute of Frauds and relevant consumer protection laws. It outlines the scope of the guarantee, conditions for enforcement, rights and obligations of all parties, and any limitations on the guarantor's liability. Personal Guaranty Agreements are particularly common in small business financing, real estate transactions, and commercial lending, where personal guarantees from business owners or related parties are often required to secure funding or contractual obligations.
Suggested Sections

1. Parties: Identifies all parties to the agreement including the guarantor, creditor, and principal debtor

2. Background: Explains the context of the guaranty, including reference to the primary obligation being guaranteed

3. Definitions: Defines key terms used throughout the agreement

4. Guarantee: Core section detailing the scope and nature of the guarantee obligation

5. Guarantor's Representations and Warranties: Statements of fact and assurances made by the guarantor regarding their capacity and authority

6. Nature of Guarantee: Specifies whether the guarantee is continuing, unconditional, or absolute

7. Payment Obligations: Details the specific payment obligations and conditions

8. Enforcement: Outlines the creditor's rights and remedies in case of default

9. Preservation of Rights: Confirms the creditor's rights are preserved despite various circumstances

10. Notices: Specifies how and where formal notices must be delivered

11. Governing Law: Specifies applicable law and jurisdiction

12. Execution: Signature blocks and execution requirements

Optional Sections

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

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

3. Guarantee Limit: Include when the guarantee is limited to a specific amount

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

5. Release Conditions: Include when specific conditions for releasing the guarantor are agreed upon

6. Assignment: Include when transfer rights need to be specifically addressed

7. Independent Legal Advice: Include when there's a requirement for the guarantor to obtain independent legal advice

8. Survival: Include when certain provisions need to survive termination of the agreement

Suggested Schedules

1. Schedule A - Primary Obligation: Details of the primary debt or obligation being guaranteed

2. Schedule B - Secured Assets: List and description of any assets securing the guarantee (if applicable)

3. Schedule C - Guarantee Limitations: Specific limitations or caps on the guarantee amount (if applicable)

4. Certificate of Independent Legal Advice: Confirmation that the guarantor received independent legal advice

5. Schedule D - Related Agreements: List of related agreements referenced in the guarantee

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

Real Estate

Commercial Lending

Manufacturing

Retail

Construction

Professional Services

Small Business

Wholesale and Distribution

Technology

Relevant Teams

Legal

Finance

Risk Management

Credit

Compliance

Commercial Lending

Treasury

Corporate Services

Business Development

Operations

Relevant Roles

Chief Financial Officer

Finance Manager

Credit Manager

Risk Manager

Legal Counsel

Commercial Lending Officer

Corporate Lawyer

Business Development Manager

Account Manager

Compliance Officer

Contract Administrator

Treasury Manager

Industries
Statute of Frauds (Provincial): Requires certain types of guarantees to be in writing and signed to be enforceable. This varies by province but is a crucial consideration for guarantee agreements.
Provincial Contract Law: General contract law principles governing formation, consideration, and enforcement of contracts, including guarantees (varies by province, e.g., Ontario Contract Law).
Consumer Protection Act (Provincial): If the guaranty involves a consumer transaction, provincial consumer protection laws may apply, providing additional rights and protections to individual guarantors.
Bankruptcy and Insolvency Act: Federal legislation that affects the enforcement and validity of guarantees in case of bankruptcy or insolvency of either the principal debtor or the guarantor.
Personal Property Security Act (PPSA): Provincial legislation that may be relevant if the guarantee is secured by personal property or involves security interests.
Limitations Act (Provincial): Sets time limits for bringing legal actions to enforce guarantees and other contractual obligations.
Interest Act: Federal legislation governing interest rates and calculations, which may be relevant if the guarantee includes interest provisions.
Fraudulent Conveyances Act (Provincial): Protects creditors against transfers of property made to defeat or hinder collection of debts, relevant for enforcement of 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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