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Loan Guarantee Agreement for Germany

Loan Guarantee Agreement Template for Germany

A German law-governed Loan Guarantee Agreement (B眉rgschaftsvertrag) is a legally binding document where a guarantor assumes responsibility for the debt obligations of a borrower towards a lender. This agreement is structured in accordance with the German Civil Code (BGB), particularly 搂搂 765-778, and outlines the scope, conditions, and limitations of the guarantee. It includes specific provisions for enforcement, representations and warranties, and payment mechanics, while incorporating necessary consumer protection elements where applicable. The document ensures compliance with German banking regulations and commercial law requirements, providing security for the lender while clearly defining the guarantor's obligations.

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Loan Guarantee Agreement

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What is a Loan Guarantee Agreement?

The Loan Guarantee Agreement is a crucial financial security instrument used when a lender requires additional assurance for a loan beyond the borrower's own creditworthiness. Under German law, this document follows strict formality requirements and must clearly outline the guaranteed obligations, making specific reference to the underlying loan agreement. The guarantee can be limited or unlimited in scope, but must be explicit in its terms as per German legal requirements. Typically used in corporate financing, real estate transactions, or when parent companies guarantee subsidiaries' obligations, the Loan Guarantee Agreement must comply with the German Civil Code (BGB) and, where applicable, German banking regulations and consumer protection laws. The document becomes particularly important in cross-border transactions where German law provides the governing framework for the guarantee relationship.

What sections should be included in a Loan Guarantee Agreement?

1. Parties: Identification of the Guarantor, the Beneficiary (typically the lender), and the Principal Debtor

2. Background: Context of the guarantee, including reference to the underlying loan agreement and the reason for the guarantee

3. Definitions: Definitions of key terms used throughout the agreement

4. Guarantee: Core section detailing the scope and nature of the guarantee obligation

5. Extent of Liability: Clear specification of the maximum amount guaranteed and any limitations

6. Representations and Warranties: Guarantor's confirmations regarding their capacity and authority to enter into the guarantee

7. Payment Mechanics: Process and timing for making payments under the guarantee, including payment details

8. Enforcement: Circumstances under which the guarantee can be enforced and the process for doing so

9. Duration and Release: Term of the guarantee and conditions for its termination or release

10. Notices: Communication procedures between parties

11. Governing Law and Jurisdiction: Confirmation of German law application and jurisdiction for disputes

12. Execution: Signature blocks and execution requirements

What sections are optional to include in a Loan Guarantee Agreement?

1. Security: Include when additional security is provided alongside the guarantee

2. Joint and Several Liability: Required when multiple guarantors are involved

3. Currency Provisions: Include for cross-border transactions involving multiple currencies

4. Tax Gross-Up: Include when tax implications need to be addressed explicitly

5. Financial Covenants: Include when the guarantor must maintain specific financial metrics

6. Information Undertakings: Include when the guarantor must provide ongoing financial or other information

7. Consumer Protection Provisions: Required when the guarantor is a consumer under German law

8. Assignment and Transfer: Include when rights under the guarantee may need to be transferred

9. Costs and Expenses: Include when specific cost allocation needs to be addressed

What schedules should be included in a Loan Guarantee Agreement?

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

2. Underlying Loan Agreement: Copy or key terms of the loan agreement being guaranteed

3. Corporate Authorizations: Copies of relevant corporate approvals and authorizations

4. Payment Details: Detailed banking and payment information

5. Calculation of Guaranteed Amount: If the guaranteed amount involves complex calculations or multiple components

6. Form of Compliance Certificate: If financial covenants are included, template for periodic compliance reporting

Authors

Alex Denne

Head of Growth (Open Source Law) @ tiktok成人版 | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Germany

Document Type

Service Agreement

Cost

Free to use
Relevant legal definitions



































Clauses






























Relevant Industries

Banking & Financial Services

Real Estate & Construction

Manufacturing & Industrial

Infrastructure & Energy

Technology & Telecommunications

Healthcare & Life Sciences

Retail & Consumer Goods

Transportation & Logistics

Agriculture & Food Production

Professional Services

Relevant Teams

Legal

Finance

Treasury

Risk Management

Compliance

Corporate Secretariat

Credit Control

Banking Operations

Business Development

Executive Leadership

Relevant Roles

Chief Financial Officer

Finance Director

Treasury Manager

Legal Counsel

Corporate Lawyer

Risk Manager

Credit Manager

Banking Relationship Manager

Compliance Officer

Financial Controller

Investment Manager

Corporate Secretary

Business Development Director

Managing Director

Board Member

Industries







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