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Loan Guarantee Form Template for England and Wales

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Key Requirements PROMPT example:

Loan Guarantee Form

"I need a Loan Guarantee Form for my company to guarantee a £500,000 business loan to our subsidiary company, with the guarantee period starting from March 2025 and lasting for 5 years."

What is a Loan Guarantee Form?

A Loan Guarantee Form is essential in lending arrangements where additional security is required beyond the principal debtor's commitments. Under English and Welsh law, this document creates a secondary obligation where the guarantor agrees to fulfill the principal debtor's obligations if they default. The form must comply with the Statute of Frauds 1677 and includes detailed provisions about the guarantee's scope, duration, and enforcement mechanisms. It's commonly used in commercial lending, property transactions, and corporate finance where lenders seek additional security for their loans.

What sections should be included in a Loan Guarantee Form?

1. Parties: Identifies all parties to the guarantee including creditor, guarantor, and principal debtor

2. Background: Sets out the context of the underlying loan and reason for guarantee

3. Definitions: Defines key terms used throughout the guarantee

4. Guarantee and Indemnity: Core provisions setting out the guarantee obligations

5. Scope of Guarantee: Defines extent and limitations of guaranteed obligations

6. Duration: Period of effectiveness of the guarantee

7. Guarantor's Obligations: Detailed responsibilities and commitments of the guarantor

8. Enforcement: Circumstances and process for enforcing the guarantee

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

1. Security Provisions: Additional provisions when the guarantee is secured against specific assets

2. Multiple Guarantors: Provisions for joint and several liability when more than one guarantor exists

3. Assignment Rights: Provisions governing the rights to assign or transfer the guarantee

What schedules should be included in a Loan Guarantee Form?

1. Principal Agreement: Copy or details of the underlying loan agreement

2. Security Details: Description of any security provided for the guarantee

3. Guaranteed Obligations: Detailed list of obligations covered by the guarantee

Authors

Alex Denne

Head of Growth (Open Source Law) @ tiktok³ÉÈ˰æ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Relevant legal definitions




























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Industries

Statute of Frauds 1677: Section 4 requires guarantees to be in writing and signed to be legally enforceable. This is a fundamental requirement for any guarantee agreement under English law.

Unfair Contract Terms Act 1977: Regulates unfair terms in contracts, particularly in business-to-business contexts. Certain terms in guarantees may be subject to reasonableness tests under this Act.

Consumer Credit Act 1974: Applies when the guarantee relates to consumer credit arrangements. Provides specific protections and requirements for guarantees in consumer credit contexts.

Consumer Rights Act 2015: Relevant when one party is a consumer, providing additional protections and requirements for fairness in consumer contracts including guarantees.

Financial Services and Markets Act 2000: Applicable if the guarantee relates to regulated financial activities. Sets out regulatory framework and requirements for financial services.

Contract Law Principles: Common law principles governing contract formation, consideration, and intention to create legal relations in the context of guarantees.

Guarantee vs Indemnity Principles: Legal distinction between guarantees (secondary obligation) and indemnities (primary obligation), affecting the nature and enforcement of the agreement.

Discharge Rules: Common law rules regarding circumstances under which a guarantee may be discharged, including material variations to the underlying contract.

Contractual Interpretation: Principles used by courts to interpret guarantee agreements, including the contra proferentem rule and basic principles of contractual construction.

FCA Regulations: Financial Conduct Authority regulations that may apply to guarantees in regulated financial services contexts.

Consumer Protection Regulations: Various consumer protection measures that may affect guarantees involving individual consumers.

Banking Regulations: Specific regulations affecting guarantees involving banks and financial institutions.

Rights of Subrogation: Legal principles governing the guarantor's right to step into the creditor's shoes after paying the guaranteed debt.

Enforcement Provisions: Legal framework for enforcing guarantees, including court procedures and remedies available to the creditor.

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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