Guarantor Indemnity Agreement Template for Pakistan

The Guarantor Indemnity Agreement is widely used in Pakistani business and financial transactions where additional security is required for financial obligations. This document is particularly important in situations where a beneficiary (usually a financial institution) requires extra protection beyond a simple guarantee. The agreement combines both guarantee and indemnity obligations, making it a more robust security instrument under Pakistani law. It is commonly used in corporate lending, project finance, and real estate transactions, where the guarantor (often a parent company, director, or related entity) provides support for the principal debtor's obligations. The document must comply with Pakistani legislation, including the Contract Act 1872 and relevant financial regulations, and may need to consider Islamic finance principles depending on the transaction structure.

1. Parties: Identifies and defines all parties to the agreement: the Guarantor, the Beneficiary, and the Principal Debtor

2. Background: Recitals explaining the context of the guarantee, including details of the underlying obligation being guaranteed

3. Definitions and Interpretation: Defines key terms used in the agreement and sets out interpretation rules

4. Guarantee: Core section setting out the guarantor's primary obligations and the scope of the guarantee

5. Indemnity: Details of the indemnity obligations of the guarantor

6. Nature of Guarantee: Specifies that the guarantee is continuing, unconditional and irrevocable

7. Preservation of Rights: Provisions ensuring the guarantee remains valid despite various changes or circumstances

8. Payments: Terms regarding payment obligations, including timing, method, and currency

9. Representations and Warranties: Guarantor's confirmations regarding capacity, authority, and financial condition

10. Undertakings: Ongoing obligations of the guarantor during the life of the guarantee

11. Enforcement: Procedures and rights for enforcing the guarantee

12. Notices: Communication procedures between parties

13. Governing Law and Jurisdiction: Specifies Pakistani law as governing law and jurisdiction for disputes

14. Execution: Signature blocks and execution formalities