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Guarantee Agreement Template for Hong Kong

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Key Requirements PROMPT example:

Guarantee Agreement

"I need a Guarantee Agreement under Hong Kong law for our tech startup to guarantee a HKD 5 million bank loan to our subsidiary, with the guarantee period starting from March 1, 2025, including specific financial covenants and quarterly reporting requirements."

Document background
The Guarantee Agreement serves as a critical security instrument in Hong Kong's financial and commercial landscape, providing additional comfort to creditors and business partners by ensuring that a third party (Guarantor) stands behind the obligations of a Principal Debtor. This document is commonly used in various contexts, including bank loans, property leases, trade finance, and commercial contracts. The agreement must comply with Hong Kong's legal framework, particularly the Contracts Ordinance and relevant banking regulations. It typically includes detailed provisions on the scope of guaranteed obligations, enforcement mechanisms, guarantor's rights and obligations, and specific protections required under Hong Kong law. The document is essential in risk mitigation strategies for financial institutions and businesses operating in Hong Kong, providing a legally enforceable mechanism to secure performance or payment obligations.
Suggested Sections

1. Parties: Identification of the Guarantor(s), Principal Debtor, and Beneficiary with full legal names and addresses

2. Background: Context of the guarantee, including reference to the primary obligation being guaranteed

3. Definitions and Interpretation: Key terms used in the agreement, interpretation rules, and construction principles

4. Guarantee and Indemnity: Core guarantee obligations, scope of guaranteed liabilities, and indemnity provisions

5. Extent and Limits of Guarantee: Maximum liability amount, duration of guarantee, and any specific limitations

6. Continuing Security: Provisions establishing the guarantee as a continuing security until full discharge

7. Guarantor's Representations and Warranties: Statements about guarantor's capacity, authority, and financial condition

8. Preservation of Rights: Beneficiary's rights preservation, including against insolvency or variation of primary obligation

9. Payments: Payment mechanisms, currency, timing, and treatment of taxes

10. Costs and Expenses: Allocation of costs related to preparation, enforcement, and amendments

11. Notices: Communication procedures between parties including addresses and delivery methods

12. Assignment and Transfer: Rights and restrictions regarding transfer of guarantee rights and obligations

13. Governing Law and Jurisdiction: Hong Kong law as governing law and jurisdiction for disputes

Optional Sections

1. Security: Include when guarantee is secured by specific assets or collateral

2. Multiple Guarantors: Additional provisions for joint and several liability when there are multiple guarantors

3. Counter-Indemnity: When guarantor requires indemnity from the principal debtor

4. Set-off Rights: Specific set-off provisions if parties maintain banking or trading relationships

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

6. Information Undertakings: Requirements for regular financial or other information from guarantor

7. Power of Attorney: When beneficiary requires power to execute documents on guarantor's behalf

8. Currency Indemnity: For cross-border transactions involving multiple currencies

Suggested Schedules

1. Schedule 1 - Guaranteed Obligations: Detailed description of the primary obligations being guaranteed

2. Schedule 2 - Guarantee Limit and Conditions: Specific monetary limits and any conditions affecting the guarantee

3. Schedule 3 - Form of Demand: Standard form for making demands under the guarantee

4. Schedule 4 - Security Details: Description of any security assets and enforcement procedures

5. Schedule 5 - Notice Details: Detailed contact information for all parties

6. Appendix A - Required Documents: List of documents to be provided by guarantor

7. Appendix B - Compliance Certificates: Forms for periodic compliance certification if required

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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Relevant Industries

Banking & Financial Services

Real Estate & Property

Construction

Manufacturing

Trading & Commerce

Retail

Infrastructure

Energy

Technology

Transportation & Logistics

Relevant Teams

Legal

Finance

Treasury

Risk Management

Compliance

Corporate Secretariat

Credit Control

Commercial Operations

Banking Operations

Relevant Roles

Chief Financial Officer

Finance Director

Legal Counsel

Corporate Secretary

Risk Manager

Credit Manager

Treasury Manager

Commercial Director

Compliance Officer

Legal Director

Banking Relationship Manager

Senior Contract Manager

Chief Legal Officer

Financial Controller

Industries








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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