Guarantee

If you’ve a potential customer whose references aren’t too clever, but you’re still tempted to take them on board, why not consider taking a personal guarantee in order to give yourself extra security? Our form enables you to pursue this as an option and so provides you with some flexibility when it comes to your customers.

Advice

In order for a guarantee to be enforceable, it must always be in writing and signed by the guarantor. If there’s consideration, there’s no requirement for it to be a deed. If you’re in any doubt, draw the document up as a deed, which simply means that it should be referred to as a deed and the guarantor’s signature must be witnessed by a third party.

Tip

Always remember that a guarantee is only as good as the credit­worthiness of the guarantor. Before accepting anyone as a guarantor, always try and find out as much as you can about their financial background. In particular, carry out credit searches, Land Registry searches as well as taking up references.

Advice

Various acts of generosity on your part can have the effect of making the guarantee worthless. These include giving the guarantor longer to pay you, releasing the debtor from their debt and releasing a co-guarantor. Our form tries to mitigate any of these things happening. Nonetheless, care must be taken when calling in the guarantee.

The guarantee can be for a set or unlimited amount. Which option you choose depends on your perception of the creditworthiness of both the customer and the prospective guarantor. Thought should also be given as to whether or not the guarantee is for a “one off” transaction or is to cover a series of contracts.