Document background
The Personal Guarantee Settlement Agreement is utilized when parties seek to resolve obligations arising from a personal guarantee in Canada. This document becomes relevant when a creditor and guarantor agree to settle the guarantee obligations on terms different from the original guarantee, often involving a reduced payment amount or modified payment terms. It's commonly used in situations where the original debtor has defaulted and the guarantor seeks to negotiate a settlement of their guarantee obligations. The agreement must comply with Canadian federal and provincial requirements, including relevant contract law principles and statutory requirements. Key components include the settlement amount, payment terms, release provisions, and any conditions precedent to the settlement becoming effective. This document is particularly important in commercial lending and business transactions where personal guarantees are commonly used as additional security for business loans or other obligations.
