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Guarantee Contract for Philippines

Guarantee Contract Template for Philippines

A Guarantee Contract under Philippine law is a legally binding agreement where one party (the guarantor) commits to fulfill the obligations of another party (the principal debtor) to a third party (the creditor) if the principal debtor fails to do so. Governed by the Civil Code of the Philippines, particularly Articles 2047-2084, this document establishes the terms, conditions, and scope of the guarantee, including payment obligations, representations and warranties, and enforcement mechanisms. The contract must comply with Philippine legal requirements regarding form, content, and execution, while considering specific rights such as the benefit of excussion unless expressly waived.

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What is a Guarantee Contract?

The Guarantee Contract is a crucial legal instrument in Philippine commercial and financial transactions, used to provide additional security for various obligations. This document type is essential when a creditor requires additional assurance beyond the principal debtor's commitment, particularly in lending arrangements, commercial contracts, or corporate transactions. The Guarantee Contract must comply with the Civil Code of the Philippines and related legislation, ensuring proper expression of the guarantee (as required by Article 2055), clear delineation of obligations, and appropriate inclusion or waiver of statutory rights. The document is commonly used in banking transactions, corporate finance, real estate developments, and various commercial arrangements where credit risk management is essential. The guarantee may be limited or continuing, secured or unsecured, and may include corporate or individual guarantors, making it a versatile instrument in Philippine business practice.

What sections should be included in a Guarantee Contract?

1. Parties: Identification of the Guarantor, the Creditor, and the Principal Debtor

2. Background: Context of the guarantee, including details of the underlying obligation or facility being guaranteed

3. Definitions: Definitions of key terms used throughout the guarantee agreement

4. Guarantee and Indemnity: Core provisions detailing the guarantee obligations and any indemnity obligations of the guarantor

5. Scope of Guarantee: Explicit description of what obligations are covered by the guarantee

6. Nature of Guarantee: Specification that the guarantee is continuing, irrevocable, and unconditional (if applicable)

7. Guarantor's Representations and Warranties: Statements about the guarantor's capacity, authority, and financial condition

8. Payment Obligations: Details of how and when the guarantor must make payments under the guarantee

9. Preservation of Rights: Provisions maintaining the creditor's rights in various circumstances

10. Termination: Conditions and process for terminating the guarantee

11. Governing Law and Jurisdiction: Specification of Philippine law as governing law and choice of courts

What sections are optional to include in a Guarantee Contract?

1. Waiver of Rights: Optional section where the guarantor waives specific rights under Philippine law, such as the benefit of excussion - include when requiring direct and immediate recourse to the guarantor

2. Security Provisions: Include when the guarantee is secured by specific assets or collateral

3. Corporate Authorizations: Required only when the guarantor is a corporation, detailing board approvals and corporate authority

4. Financial Covenants: Include when the guarantor must maintain specific financial metrics or conditions

5. Multiple Guarantors: Include when there is more than one guarantor, specifying joint and several liability

6. Assignment and Transfer: Include when rights under the guarantee may be assigned or transferred

7. Counter-Indemnity: Include when the guarantor requires indemnification from the principal debtor

What schedules should be included in a Guarantee Contract?

1. Schedule 1 - Guaranteed Obligations: Detailed description of the obligations being guaranteed

2. Schedule 2 - Form of Demand: Standard form for making demands under the guarantee

3. Schedule 3 - Conditions Precedent: List of documents and conditions required before the guarantee becomes effective

4. Schedule 4 - Security Details: Details of any security or collateral (if applicable)

5. Appendix A - Corporate Authorizations: Copies of relevant corporate approvals and authorizations

6. Appendix B - Underlying Facility Agreement: Copy or summary of the main 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

Philippines

Publisher

Ƶ

Document Type

Service Agreement

Cost

Free to use
Relevant legal definitions



































Clauses






























Relevant Industries

Banking and Financial Services

Real Estate and Property Development

Construction

Manufacturing

Retail and Commerce

Infrastructure Development

Energy and Utilities

Telecommunications

Agriculture

Import/Export

Professional Services

Relevant Teams

Legal

Finance

Treasury

Risk Management

Compliance

Corporate Secretariat

Commercial

Credit

Corporate Finance

Business Development

Relevant Roles

Chief Financial Officer

Finance Director

Legal Counsel

Corporate Secretary

Credit Risk Manager

Commercial Director

Treasury Manager

Contracts Manager

Risk Officer

Compliance Officer

Banking Relationship Manager

Corporate Finance Manager

Security Trustee

Business Development Director

Chief Legal Officer

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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