Continuing Guaranty Agreement Template for India

The Continuing Guaranty Agreement is a vital legal instrument in Indian commercial and financial transactions, commonly used when there's a need for ongoing security for business obligations. This document is particularly relevant when a creditor requires additional security for extending credit or financial facilities to a debtor on a continuing basis. The agreement, governed by Indian law, specifically the Indian Contract Act, 1872, creates a comprehensive framework for the guarantee relationship, detailing the extent of liability, conditions for enforcement, and rights of all parties. It's frequently used in banking relationships, corporate group structures, and commercial lending scenarios where the guarantor agrees to secure both existing and future obligations of the principal debtor. The continuing nature of the guarantee means it remains effective for future transactions or obligations until explicitly revoked, making it particularly valuable for ongoing business relationships.

1. Parties: Identifies all parties to the agreement including the Guarantor, Principal Debtor, and Creditor with their full legal names and addresses

2. Background: Recitals explaining the context of the guarantee, relationship between parties, and purpose of the guarantee

3. Definitions: Defines key terms used throughout the agreement including 'Guaranteed Obligations', 'Event of Default', and other relevant terms

4. Guarantee: Core provision establishing the guarantee, its scope, and nature (continuing, unconditional, irrevocable)

5. Extent of Guarantee: Specifies the maximum liability amount and nature of obligations covered

6. Duration: Establishes the term of the guarantee and conditions for its continuation

7. Guarantor's Obligations: Details the specific obligations and undertakings of the guarantor

8. Representations and Warranties: Standard representations by the guarantor regarding capacity, authority, and financial condition

9. Independence of Guarantee: Confirms the guarantee is independent of the principal debtor's obligations and other securities

10. Preservation of Rights: Provisions ensuring creditor's rights are preserved despite any changes in circumstances

11. Demand and Payment: Procedures for making demands under the guarantee and payment obligations

12. Events of Default: Specifies circumstances constituting default under the guarantee

13. Rights of Subrogation: Addresses guarantor's rights of subrogation and when they can be exercised

14. Notices: Communication requirements and procedures between parties

15. Governing Law and Jurisdiction: Specifies Indian law as governing law and jurisdiction for disputes