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Guarantee Agreement for Malaysia

Guarantee Agreement Template for Malaysia

A Guarantee Agreement under Malaysian law is a legally binding document where one party (the guarantor) agrees to be responsible for the debts, obligations, or performance of another party (the principal debtor) to a third party (the creditor). The agreement is governed by the Malaysian Contracts Act 1950 and must comply with local stamping requirements under the Stamp Act 1949. It includes detailed provisions on the scope of the guarantee, payment obligations, enforcement mechanisms, and the circumstances under which the guarantee can be called upon. The document serves as a critical risk mitigation tool in various commercial and financial transactions in Malaysia.

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What is a Guarantee Agreement?

A Guarantee Agreement is a crucial legal instrument in Malaysian commercial and financial transactions, commonly used to provide additional security for loans, financial facilities, or other commercial obligations. This document type is governed by Malaysian law, particularly the Contracts Act 1950, and requires careful drafting to ensure enforceability and compliance with local legal requirements. The agreement is typically used when a creditor requires additional security beyond the principal debtor's covenant, such as in corporate lending, property transactions, or project financing. The Guarantee Agreement will specify the guaranteed obligations, the extent of the guarantor's liability, enforcement mechanisms, and any limitations or conditions on the guarantee. It must be properly executed and stamped in accordance with Malaysian law to be admissible in court.

What sections should be included in a Guarantee Agreement?

1. Parties: Identifies and defines the Guarantor, the Creditor, and the Principal Debtor

2. Background: Sets out the context of the guarantee, including details of the primary obligation being guaranteed

3. Definitions and Interpretation: Defines key terms used throughout the agreement and establishes interpretation principles

4. Guarantee and Indemnity: Core section establishing the guarantee obligations and indemnity provisions

5. Scope of Guarantee: Defines the extent and limitations of the guaranteed obligations

6. Duration of Guarantee: Specifies when the guarantee becomes effective and when it terminates

7. Guarantor's Representations and Warranties: Key statements and assurances given by the guarantor regarding their capacity and authority

8. Payment Provisions: Details of how and when payments must be made under the guarantee

9. Enforcement and Remedies: Specifies the creditor's rights and remedies upon default

10. Notices: Specifies how formal communications between parties should be made

11. Governing Law and Jurisdiction: Confirms Malaysian law as governing law and specifies jurisdiction for disputes

What sections are optional to include in a Guarantee Agreement?

1. Multiple Guarantors: Required when there is more than one guarantor, defining joint and several liability

2. Security Provisions: Include when the guarantee is supported by specific security arrangements

3. Assignment and Transfer: Include when parties need the right to assign or transfer their rights/obligations

4. Corporate Authorizations: Required when the guarantor is a company, detailing corporate approvals

5. Currency Provisions: Include when the guarantee involves obligations in multiple currencies

6. Cost and Expenses: Optional section detailing responsibility for costs associated with the guarantee

7. Guarantee Limitations: Include when specific limitations on the guarantee amount or scope are required

8. Step-In Rights: Include when the guarantor needs rights to step into the principal debtor's position

What schedules should be included in a Guarantee Agreement?

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

2. Guaranteed Obligations: Detailed description of the obligations being guaranteed

3. Security Details: Details of any security provided in support of the guarantee

4. Corporate Authorizations: Copies of relevant corporate approvals and resolutions

5. Payment Details: Bank account and payment instruction details

6. Principal Agreement: Copy or key terms of the agreement being guaranteed

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

Malaysia

Publisher

Ƶ

Document Type

Agreement Contract

Cost

Free to use
Relevant legal definitions























Clauses



























Relevant Industries

Banking

Financial Services

Real Estate

Construction

Manufacturing

Trading

Commercial Lending

Infrastructure

Retail

Hospitality

Technology

Healthcare

Relevant Teams

Legal

Finance

Risk Management

Compliance

Treasury

Corporate Secretarial

Credit

Commercial

Corporate Finance

Relevant Roles

Legal Counsel

Corporate Lawyer

Finance Manager

Credit Risk Manager

Commercial Director

Chief Financial Officer

Banking Officer

Compliance Officer

Contract Manager

Treasury Manager

Company Secretary

Risk Officer

Corporate Finance Manager

Industries







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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