Document background
The Personal Guarantee Agreement is a crucial document in Indian business and financial transactions, commonly used when banks or financial institutions require additional security for loans or credit facilities. This agreement, governed by Indian law, particularly the Indian Contract Act, 1872, provides creditors with recourse to the personal assets of a guarantor if the principal debtor defaults on their obligations. It's frequently used in corporate borrowing scenarios where directors or promoters personally guarantee company debts, in real estate transactions, and in various business financing arrangements. The document typically includes comprehensive details about the guaranteed obligations, enforcement mechanisms, guarantor's representations, and specific conditions under which the guarantee can be invoked. Recent Indian judicial precedents have emphasized the importance of clear drafting and full disclosure in such agreements to ensure enforceability.
