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Corporate Guarantee For Bank Loan for the United Kingdom

Corporate Guarantee For Bank Loan Template for England and Wales

A Corporate Guarantee For Bank Loan is a legally binding document under English and Welsh law where a company (the guarantor) agrees to guarantee the repayment obligations of another entity (the principal debtor) to a bank or financial institution. The guarantee creates a secondary obligation whereby the guarantor commits to fulfil the principal debtor's obligations if they fail to do so. This document is governed by English common law principles and relevant statutes, including the Statute of Frauds 1677 and the Companies Act 2006.

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Corporate Guarantee For Bank Loan

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What is a Corporate Guarantee For Bank Loan?

A Corporate Guarantee For Bank Loan is commonly used in commercial lending transactions where additional security is required by the lender. The document sets out the terms under which the guarantor company will assume responsibility for the borrower's obligations if they default on their loan payments. Governed by English and Welsh law, it includes specific provisions regarding the scope of the guarantee, enforcement mechanisms, and the rights and obligations of all parties. This type of guarantee is particularly important in group company structures or where parent companies support their subsidiaries' borrowing.

What sections should be included in a Corporate Guarantee For Bank Loan?

1. Parties: Details of the Guarantor, Principal Debtor (borrower), and Beneficiary (bank)

2. Background: Context of the guarantee, reference to the principal loan agreement

3. Definitions: Key terms used throughout the guarantee

4. Guarantee and Indemnity: Core obligations of the guarantor, including scope of guarantee

5. Nature of Guarantee: Continuing security, primary or secondary nature of obligations

6. Representations and Warranties: Guarantor's confirmations regarding capacity and authority

7. Payment Mechanics: Terms for making payments under the guarantee

8. Enforcement: Rights and remedies of the beneficiary

9. Duration: Term of the guarantee and conditions for release

What sections are optional to include in a Corporate Guarantee For Bank Loan?

1. Security Provisions: Additional security arrangements when guarantee is secured against specific assets

2. Subordination: Ranking of guarantee obligations when multiple guarantees or security exists

3. Tax Gross-up: Provisions for tax-related payments when tax implications need specific addressing

4. Currency Provisions: Handling of multiple currencies for cross-border transactions

What schedules should be included in a Corporate Guarantee For Bank Loan?

1. Form of Demand: Template for making demands under the guarantee

2. Guaranteed Obligations: Detailed description of obligations being guaranteed

3. Corporate Authorizations: Copies of relevant board resolutions and powers of attorney

4. Principal Facility Agreement: Copy or summary of the underlying loan agreement

Authors

Alex Denne

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

Jurisdiction

England and Wales

Publisher

Ƶ

Document Type

Bank Guarantee

Sector

Banking

Cost

Free to use
Relevant legal definitions



































Clauses






























Industries

Statute of Frauds 1677: Fundamental legislation requiring guarantees to be in writing and signed to be legally enforceable

Companies Act 2006: Key legislation governing corporate capacity, authority, directors' duties, corporate benefit requirements and registration obligations for companies

Financial Services and Markets Act 2000: Regulatory framework for financial services, relevant for regulatory compliance in guarantee arrangements

Consumer Credit Act 1974: May be applicable in cases involving small businesses, though primarily focused on consumer guarantees

Unfair Contract Terms Act 1977: Governs the reasonableness of contract terms and limitation of liability provisions in guarantee agreements

Contract Law Principles: Common law principles covering offer, acceptance, consideration, and intention to create legal relations

Banking Law Principles: Common law principles specific to banking, including rights of guarantors and primary/secondary obligations

Corporate Insolvency and Governance Act 2020: Legislation affecting the treatment of guarantees during corporate insolvency situations

Money Laundering Regulations 2017: Regulations governing due diligence requirements in financial transactions including guarantees

UK Corporate Governance Code: Relevant for listed companies, providing governance guidelines that may affect guarantee arrangements

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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