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Personal Guarantee Agreements are commonly used in Canadian business and lending contexts when a creditor requires additional security beyond the principal debtor's own creditworthiness. These agreements are particularly common in small business financing, where lenders often require personal guarantees from business owners or directors. The document must comply with various federal laws such as the Bankruptcy and Insolvency Act and provincial legislation including Personal Property Security Acts. A Personal Guarantee Agreement typically specifies the scope of guaranteed obligations, enforcement mechanisms, and the guarantor's rights and obligations. It's essential in situations where a business entity's assets alone are insufficient security for a loan, or when dealing with new businesses without established credit history. The agreement should be carefully drafted to ensure enforceability across Canadian jurisdictions and to protect both the creditor's interests and the guarantor's rights.

1. Parties: Identifies the guarantor (person providing the guarantee) and the creditor (person/entity receiving the guarantee), including full legal names and addresses

2. Background: Explains the context of the guarantee, identifying the principal debtor and the underlying obligation being guaranteed

3. Definitions: Defines key terms used throughout the agreement, including 'Guaranteed Obligations', 'Principal Debtor', 'Security', etc.

4. Guarantee: Core section detailing the scope and nature of the guarantee, including the amount guaranteed and whether it is limited or unlimited

5. Nature of Guarantee: Specifies whether the guarantee is continuing, irrevocable, and absolute, and whether it is a guarantee of payment or collection

6. Guarantor's Obligations: Details the specific obligations and responsibilities of the guarantor, including payment terms and conditions

7. Representations and Warranties: Guarantor's confirmations regarding their legal capacity, authority, and financial condition

8. Enforcement: Describes the creditor's rights and remedies in case of default

9. Preservation of Rights: Explains how the creditor's rights are preserved despite various circumstances that might otherwise affect them

10. Notices: Specifies how and where formal notices under the agreement must be delivered

11. General Provisions: Standard boilerplate clauses including governing law, jurisdiction, assignment, and amendments