The Personal Guarantee Agreement is a crucial document in German business and financial transactions, commonly used when additional security is required for loans, leases, or other financial obligations. It must strictly comply with German Civil Code (BGB) requirements, particularly regarding form and content. The agreement is frequently used in banking, real estate, and commercial contexts, but requires careful consideration of consumer protection laws when individuals provide guarantees, especially following landmark decisions by the German Constitutional Court regarding guarantees by family members. The document typically includes detailed provisions on the scope of the guarantee, enforcement mechanisms, and risk disclosures, and must be executed in writing to be valid under German law. Special attention must be paid to ensuring the guarantor fully understands their obligations and the potential risks involved.
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1. Parties: Identification of the Guarantor (B眉rge), the Creditor (Gl盲ubiger), and reference to the Principal Debtor (Hauptschuldner)
2. Background: Context of the guarantee, including reference to the underlying debt or obligation being guaranteed
3. Definitions: Key terms used in the agreement, including 'Guaranteed Obligations', 'Enforcement Event', and other relevant definitions
4. Guarantee: Core guarantee provisions, scope of the guarantee, and nature (e.g., whether it's a absolute guarantee or deficiency guarantee)
5. Extent of Liability: Clear specification of the maximum amount guaranteed and any limitations on the guarantor's liability
6. Representations and Warranties: Guarantor's confirmations regarding their capacity, understanding of obligations, and financial situation
7. Payment Obligations: Terms for making payments under the guarantee, including timing and method
8. Enforcement: Conditions for enforcing the guarantee and the process to be followed
9. Duration: Term of the guarantee and conditions for termination
10. Notices: Process for formal communications between parties
11. Governing Law and Jurisdiction: Confirmation of German law governance and jurisdiction for disputes
1. Independent Guarantee: Section declaring the guarantee as independent from the main obligation (required only for 'selbst盲ndige Garantie')
2. Multiple Guarantors: Additional provisions needed when there is more than one guarantor
3. Security: Provisions regarding any additional security provided to support the guarantee
4. Assignment and Transfer: Terms governing the transfer of rights under the guarantee (if transferability is desired)
5. Financial Covenants: Financial maintenance requirements for the guarantor (typically used in commercial contexts)
6. Tax Gross-Up: Provisions for tax treatment of payments under the guarantee
7. Acknowledgment of Independent Legal Advice: Confirmation that the guarantor has received independent legal advice (recommended for personal guarantees)
1. Schedule 1 - Guaranteed Agreement: Copy or key terms of the underlying agreement being guaranteed
2. Schedule 2 - Form of Demand: Template for making a formal demand under the guarantee
3. Schedule 3 - Guarantor's Asset Statement: Declaration of the guarantor's financial situation (where required)
4. Appendix A - Risk Disclosure: Detailed explanation of the risks associated with providing the guarantee
5. Appendix B - Contact Details: Contact information for all parties and their authorized representatives
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