Document background
A Guarantee Promissory Note is typically used in Canadian business and financial transactions where additional security is required beyond a simple promise to pay. This document is particularly valuable when the creditor requires extra assurance of payment through a third-party guarantee, commonly used in business loans, commercial transactions, or private lending arrangements. The document combines the formal requirements of a promissory note under the federal Bills of Exchange Act with guarantee provisions governed by provincial contract law. It includes specific details about the primary debt obligation, payment terms, interest rates, and the guarantee provisions. This type of document is especially useful in situations where the primary debtor's creditworthiness needs to be supplemented by a guarantor's financial strength, providing an additional layer of security for the creditor.
