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A Guarantee Agreement binds a guarantor to fulfill someone else's financial obligations if they fail to pay. In Indonesian business practice, these agreements help secure loans and business deals by having a third party promise to cover the debt if the main borrower defaults.

Under Indonesian Civil Code Article 1820, guarantors become legally responsible for the original debt, though they can only be called upon after the primary debtor fails to pay. Banks and financial institutions commonly use these agreements for business loans, while companies might require them when extending significant credit to new customers or partners.

Use a Guarantee Agreement when extending significant credit or loans but need extra security beyond the borrower's own assets. Indonesian banks regularly require these agreements from business owners or parent companies before approving commercial loans, especially for newer or smaller enterprises with limited credit history.

The agreement becomes particularly valuable in high-stakes transactions like property development, major equipment purchases, or trade financing. Under Indonesian law, having a guarantee in place creates an additional layer of protection, letting you confidently move forward with deals that might otherwise seem too risky.

• Personal Guaranty Agreement: Individual guarantors back a business loan with their personal assets
• Guarantee Rental Agreement: Third party guarantees rent payments for residential or commercial leases
• Personal Guarantee Letter: Simpler format used for smaller obligations or short-term commitments
• Guarantor Contract: Comprehensive agreement often used in corporate settings
• Continuing Guarantee Agreement: Covers multiple future transactions between the same parties

• Banks and Financial Institutions: Require Guarantee Agreements when issuing loans, especially to small businesses or startups
• Business Owners: Personally guarantee company loans or credit lines with their private assets
• Parent Companies: Guarantee obligations of their subsidiaries to strengthen business relationships
• Corporate Legal Teams: Draft and review agreements to ensure compliance with Indonesian banking regulations
• Property Owners: Request guarantees from tenants for commercial or residential leases
• Professional Guarantors: Companies or individuals who provide guarantees as a service, common in trade finance

• Basic Details: Gather full legal names, addresses, and business registration numbers of all parties
• Debt Information: Document the exact amount, terms, and conditions of the primary obligation being guaranteed
• Asset Verification: Confirm the guarantor's financial capacity and ownership of declared assets
• Scope Definition: Clearly outline the extent and duration of the guarantee coverage
• Documentation: Collect supporting documents like ID cards, business licenses, and company registration
• Legal Review: Use our platform to generate a legally-sound agreement that meets Indonesian regulatory requirements
• Signature Requirements: Prepare for proper witnessing and notarization as needed under local law

• Party Details: Complete legal names, addresses, and identification of creditor, debtor, and guarantor
• Guaranteed Obligation: Precise description of the primary debt or obligation being secured
• Guarantee Scope: Clear terms of what the guarantee covers and any limitations
• Payment Terms: Specific conditions triggering the guarantee and payment procedures
• Duration Clause: Start date and expiration conditions of the guarantee
• Default Provisions: Actions taken if the primary debtor fails to meet obligations
• Governing Law: Statement confirming Indonesian law applies and jurisdiction details
• Execution Block: Proper signature sections with witness requirements per Indonesian regulations

A Guarantee Agreement differs significantly from a Bank Guarantee in several key ways. While both provide financial security, their structure and application serve different purposes in Indonesian business transactions.

• Issuing Party: Guarantee Agreements can be issued by any individual or company, while Bank Guarantees must come from licensed financial institutions
• Legal Framework: Bank Guarantees follow strict banking regulations and Bank Indonesia guidelines, while Guarantee Agreements operate under broader civil law principles
• Payment Timeline: Bank Guarantees typically require immediate payment upon default, while Guarantee Agreements often allow for negotiated payment terms
• Documentation: Bank Guarantees require more extensive paperwork and financial verification, whereas Guarantee Agreements can be more flexibly structured
• Cost Structure: Bank Guarantees involve banking fees and commissions, while Guarantee Agreements usually don't carry direct costs beyond legal documentation