The multitude of issues to consider when managing a successful business mean that sometimes it is easy to overlook less vital aspects such as guarantees. However, these details are of vital importance to the smooth running of a business.
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This is usually known as a Director's or Personal Guarantee, and may be provided by either the directors of the company or the shareholders, or in some cases a third party with a higher credit worthiness.
Different Types of Commercial Guarantees
There are several common forms of commercial guarantee, which are each governed by various terms and conditions. The most usual guarantee agreements come under the following headings:
- Single Guarantee - A Single Guarantee is valid for payment of a single transaction and no more. The guarantor's liability is discharged once that single payment has been made.
- Continuous Guarantee - Continuous Guarantees cover debts incurred to a supplier over a series of transactions, provided they come within the terms stipulated by the agreement. The guarantor is responsible for all payments until official notice is given to the supplier of a change in circumstances.
- Limited Guarantee - In this case a financial limit is agreed on the amount of revenue guaranteed prior to transactions being made. The guarantor is therefore not liable for any debts incurred that surpass that limit.
- Joint or Several Guarantee - This is when a guarantee is provided by two or more parties, who are therefore each liable for the debt in equal amounts (unless otherwise specified). However, if one or some of the guarantors fail to honour the debt, those remaining can be left responsible for the entire amount.
Commercial Guarantees Terms
Whether your business is a limited company or a private individual, our expert solicitors can advise you on securing or providing a commercial guarantee, and on drawing up and agreeing the terms with your customer or supplier, or we can advise on banks' conditions if you are applying for a loan. The terms of guarantees given to banks are of vital importance to corporate entities.
Debt Collection
Gray Purdue lawyers also specialise in debt collection if you are having problems with debtors. In the case of a dispute we prefer to avoid the complex legal process and settle through Negotiation and Arbitration if possible, but if it becomes necessary to pursue Court Proceedings we will provide you with professional and expert representation to guide you through the procedure as quickly and with as little inconvenience as possible.
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