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Guarantor Promissory Note

Guarantor Promissory Note Template for India

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Key Requirements PROMPT example:

Guarantor Promissory Note

"I need a Guarantor Promissory Note for a business loan of INR 25 lakhs with two guarantors, including security over business equipment and monthly installment payments starting March 2025."

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Document background
The Guarantor Promissory Note is a specialized financial instrument commonly used in Indian lending practices where additional security is required beyond a simple promise to pay. This document type is particularly useful in situations where a creditor requires extra assurance for debt repayment, combining the features of a standard promissory note with a guarantee obligation. It's governed primarily by the Negotiable Instruments Act, 1881 and the Indian Contract Act, 1872, making it a robust legal instrument for securing financial obligations. The document typically includes details of the primary debt, payment terms, interest rates, and specific undertakings by both the primary debtor and the guarantor. It's widely used in both commercial and personal lending scenarios, offering creditors multiple avenues for recovery in case of default.
Suggested Sections

1. Date and Place: Specific date and location where the promissory note is executed, which is crucial for determining jurisdiction and limitation period

2. Details of Parties: Full names, addresses, and identification details of the primary debtor (maker), creditor (payee), and guarantor

3. Promise to Pay Clause: Unconditional promise to pay a specific sum of money, including the amount in both figures and words

4. Payment Terms: Details of when and how the payment is to be made, including interest rate if applicable

5. Guarantor's Undertaking: Specific declaration by the guarantor accepting liability for the debt in case of default by the primary debtor

6. Demand and Notice: Terms regarding when and how demand for payment can be made and notice requirements

7. Execution Block: Signatures of the maker (primary debtor) and guarantor, with witness attestation

Optional Sections

1. Security Details: Include when the promissory note is secured by any specific assets or collateral

2. Default Interest: Add when there's an agreement for a different interest rate applicable upon default

3. Multiple Guarantors Clause: Include when there are multiple guarantors, specifying joint and several liability

4. Renewal Terms: Add when the note includes provisions for renewal or extension

5. Jurisdiction Clause: Include when parties want to specify a particular court's jurisdiction for dispute resolution

Suggested Schedules

1. Schedule A - Payment Schedule: If installment payments are involved, detailed schedule of payment dates and amounts

2. Schedule B - Security Details: If applicable, detailed description of any security or collateral provided

3. Appendix 1 - KYC Documents: Copies of identity and address proofs of all parties as required by banking regulations

4. Appendix 2 - Authority Documents: If any party is a company/firm, include board resolutions or authorization documents

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

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alex.den.21@genieai.co
Relevant Industries

Banking & Financial Services

Commercial Lending

Microfinance

Real Estate

Small Business Banking

Corporate Banking

Retail Banking

Agriculture Finance

Manufacturing

Trading & Commerce

Relevant Teams

Legal

Credit

Risk Management

Compliance

Operations

Collections

Corporate Banking

Retail Banking

Documentation

Small Business Banking

Relevant Roles

Credit Manager

Loan Officer

Legal Counsel

Compliance Officer

Risk Manager

Branch Manager

Financial Advisor

Relationship Manager

Collections Manager

Credit Analyst

Corporate Banking Officer

Small Business Lending Officer

Chief Credit Officer

Documentation Specialist

Industries
Negotiable Instruments Act, 1881: Primary legislation governing promissory notes in India, defining their characteristics, requirements for validity, and rules for negotiation and enforcement
Indian Contract Act, 1872: Governs the fundamental aspects of contract formation and specifically addresses contracts of guarantee under Sections 126-147, defining the rights and obligations of guarantors
Limitation Act, 1963: Specifies the limitation period for enforcing promissory notes and guarantee obligations (typically 3 years from the date of default)
Indian Stamp Act, 1899: Determines the stamp duty requirements for promissory notes and guarantee documents, which varies by state
Registration Act, 1908: May be relevant if the guarantee amount exceeds certain thresholds or if the guarantee involves immovable property
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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