Corporate Guarantee Agreement Template for England and Wales

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Key Requirements PROMPT example:

Corporate Guarantee Agreement

"Need a Corporate Guarantee Agreement for our UK subsidiary to guarantee a £5 million loan facility to our French operation, to be effective from March 2025, with specific provisions for cross-border enforcement and currency conversion."

Document background
A Corporate Guarantee Agreement is commonly used in commercial transactions where additional security is required for business obligations. Under English and Welsh law, this document provides a legally enforceable commitment from a company to guarantee the performance, payment, or obligations of another party. It's particularly valuable in situations involving group companies, project financing, or significant commercial contracts where the beneficiary requires additional comfort beyond the principal debtor's covenant. The agreement must comply with specific formality requirements under English law and typically includes comprehensive provisions regarding the scope of the guarantee, enforcement mechanisms, and the rights and obligations of all parties involved.
Suggested Sections

1. Parties: Identification of guarantor and beneficiary

2. Background: Context of the guarantee and underlying obligations

3. Definitions: Key terms used throughout the agreement

4. Guarantee and Indemnity: Core obligations of the guarantor

5. Scope of Guarantee: Extent of guaranteed obligations

6. Preservation of Rights: Beneficiary's rights preservation clauses

7. Representations and Warranties: Guarantor's confirmations about capacity and authority

8. Payments: Payment terms and mechanisms

9. Governing Law and Jurisdiction: Choice of law and dispute resolution provisions

Optional Sections

1. Security Provisions: Additional security arrangements - include when additional security is required

2. Currency Provisions: Currency conversion and payment rules - include for cross-border guarantees

3. Tax Gross-up: Provisions for tax-related payments - include when tax implications need addressing

Suggested Schedules

1. Form of Demand: Template for making demands under the guarantee

2. Guaranteed Obligations: Detailed list of obligations being guaranteed

3. Corporate Authorizations: Copies of relevant board resolutions and powers of attorney

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

Relevant legal definitions
Clauses
Industries

Statute of Frauds 1677: Section 4 requires guarantees to be in writing and signed by the guarantor or their authorized representative to be legally enforceable

Companies Act 2006: Primary legislation governing company operations in the UK, particularly relevant for corporate capacity and authority to give guarantees

Unfair Contract Terms Act 1977: Regulates the reasonableness of contract terms and attempts to exclude or restrict liability in contracts

Consumer Rights Act 2015: Relevant if the guarantee has any consumer-facing elements, protecting consumer rights and regulating unfair terms

Common Law Contract Principles: Fundamental principles including offer, acceptance, consideration, and intention to create legal relations

Ultra Vires Doctrine: Legal principle concerning corporate capacity to enter into transactions, though largely abolished by Companies Act 2006

Financial Services and Markets Act 2000: Regulatory framework for financial services in the UK, relevant if guarantee involves regulated activities

Financial Collateral Arrangements (No.2) Regulations 2003: Regulations governing financial collateral arrangements between non-natural persons

UK Corporate Governance Code: Sets out standards of good practice for listed companies on board composition and corporate governance

Rome I Regulation: EU regulation determining applicable law in contractual obligations, retained in UK law post-Brexit

Brussels I Regulation (recast): Regulation concerning jurisdiction in civil and commercial matters, relevant for cross-border guarantees

Insolvency Act 1986: Primary legislation governing corporate insolvency, relevant for enforcement of guarantees

Company Directors Disqualification Act 1986: Legislation concerning director conduct and potential disqualification, relevant for corporate authority considerations

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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