Contract of guarantee meaning

What this checklist covers This checklist sets out the principal matters a solicitor guiding a first time issuer must verify and, where appropriate, propose changes to, when reviewing English law terms and conditions governing an issue of debt securities...

This checklist sets out the key issues to consider when reviewing a PCG on behalf of a contractor who is being asked to provide a PCG. The terms 'contractor' and 'employer' are used, but the same principles also extend to arrangements between a contractor and a sub-contractor, or between an employer/contractor and a consultant. As PCGs are commonly bespoke, the particular context should be taken into account when assessing a PCG. For a fuller discussion of these points, see Practice Note: Parent company guarantees (PCGs) in construction—drafting and negotiation issues. Is the contractor obliged under the Building Contract to provide a PCG? If not, there is no requirement for the contractor to deliver one. Nevertheless, a contractor might still agree to give a PCG to reassure the employer and to create or sustain a good working relationship. Do the contractor’s internal policies allow the issue of PCGs, and is any approval necessary? Many businesses would opt to give a PCG rather than a performance bond,...

Introduction When contracting in a business-to-business setting, aim to secure as much contractual protection as your negotiating position allows. This checklist explains how key clauses can control risk and safeguard businesses-whether you are a supplier or a customer-and how to negotiate them to extract the greatest benefit... Key provisions General comments Payment Payment security Confirm the financial stability of the party you are buying from or selling to by carrying out a credit check. Decide if a payment safeguard is needed, for example: a parent company guarantee a letter of credit or a bank performance bond Customer Will the customer be able to honour its payment commitments? Consider obtaining credit insurance, and continue to run credit checks throughout the life of the contract to manage overall exposure to financial risk... Supplier Is the supplier financially capable of meeting your supply demands... Payment terms...

Banking & Finance—August and September 2025 case round-up LLC Eurochem North-West-2 and another company v Societe Generale S.A. and other companies [2025] EWHC 1938 (Comm) Ralli Bros principle—‘place of performance’—on-demand bonds—sanctions The High Court examined application of the Ralli Bros principle to on-demand bonds. Under that principle, an English law governed contract is unenforceable if performance would contravene the law of the place where it must be carried out. The banks argued that EU asset-freezing provisions in EU Regulation 269/2014 prevented payments under certain on-demand bonds. On the facts, the court held the Ralli Bros principle did apply. The judgment considers what counts as the ‘place of performance’ for on-demand bonds. The claimants said Russia, relying chiefly on the rule that ‘the debtor must follow the creditor’: where no place of payment is stated, payment is due where the creditor is based. As EuroChem sought payment to a Russian account, they argued Russia was the ‘place of performance’...

Here we set out the background to the Guralp DPA, consider the issues that arose regarding the disgorgement of profits and the DPA’s duration, and explain how the court addressed these matters... Background Guralp agreed a DPA with the SFO in October 2019, becoming the sixth company in the UK to do so. This followed an investigation into claims that the business had bribed a foreign public official to secure sales of its technology. Over a 13‑year span, three former staff members were said to have made corrupt payments to an official at the Korean Institute of Geoscience and Mineral resources to guarantee purchases of Guralp’s seismic monitoring equipment. Although the individual defendants were acquitted at trial, the company admitted conspiring to make corrupt payments and, for conduct after 2011—when the Bribery Act 2010 (BA 2010) took effect—failing to prevent bribery. The case against the company concluded through the DPA, which was publicly disclosed once the individuals’ trials had finished. Owing to Guralp’s fragile financial position, the DPA...

In this issue Court of Protection UK taxation for private clients Updates to HMRC Manuals Tax avoidance, evasion and non-compliance Budgets and Finance Bills Private client insolvency Digital and crypto assets Charity and philanthropy Disputed trusts and estates Pensions, insurance and tax‑efficient investments International Further Private Client updates this week Question of the week News alerts—daily and weekly LexTalk® Private Client: a Lexis+® community New and updated content Dates for your diary Trackers Latest Q&As Useful information Court of Protection Court rules that an anonymity application under CPR 39.2(4) and section 6 of the Human Rights Act 1998 must proceed on a statutory basis (PMC (a child by his mother and litigation friend FLR) v Local Health Board) The claimant, a boy born in 2012, pursued a clinical negligence action against an NHS trust for injuries at birth. The claim, issued in March...

This Practice Note is archived and no longer updated or maintained. It outlines the differences introduced in the NEC4 standard form construction contracts when set against the NEC3 versions. It also summarises the changes from NEC3 across the standard forms. The spotlight is on the NEC4 Engineering and Construction Contract (ECC), though many ECC revisions mirror those rolled out across the broader NEC suite. Many of the points made in relation to the ECC are indicative of suite-wide adjustments. The NEC characterises NEC4 as an ‘evolution not revolution’, building on NEC3. The bulk of NEC4’s revisions appear aimed at embedding sound practice and/or cutting reliance on Z clauses (ie bespoke amendments). For further details on NEC contracts in general, including their structure, see Practice Note: NEC contracts—introduction. Publication of NEC4 The NEC4 contracts were issued by the Institution of Civil Engineers on 22 June 2017...

Guarantees A guarantee is a contract under which the guarantor agrees to be answerable for the principal’s liabilities to another party (the guaranteed party). Over time, the common law has evolved to afford substantial protections for guarantors. The central rationale for these protections is to ensure the guarantor has certainty about the amount, nature and terms of the obligations it is supporting, and to preserve the rights the guarantor acquires by giving the guarantee. For more information on guarantor rights, see Practice Note: Guarantor rights and how to defer them in guarantee documentation—no competition clauses. As these protections can prejudice a lender’s position, it is common practice for lenders to seek to exclude such rights in guarantee documentation...

This Practice Note offers a high-level summary of insurance clauses within commercial agreements. It outlines the main categories of insurance commonly used in such agreements and the principal features of insurance clauses and covenants. It is not intended to set out the law of insurance; in that regard, see Insurance contracts—overview. Nor does it consider the many other ways to obtain security for contractual liabilities beyond placing insurance. Given the potential limits of insurance cover, parties may conclude that alternative arrangements suit their needs better, for example obligations of surety such as guarantees from a group and/or parent company, or performance or guarantee bonds. See Types of security—overview for further guidance. Role of insurance clauses in commercial agreements The core function of a commercial contract is to apportion the risks and benefits of the transaction between the parties. Risk can be allocated in various ways; a clear illustration is through indemnities, which require one party to reimburse the other for liabilities they incur under the contract. It is...

The Contract comprises the completed Standard Building Contract Without Quantities for use in Scotland 2016 published by the SBCC subject to the following amendments: Recitals and Articles updated: contractor to provide a master programme and Schedule of Information Requirements; CDP responsibility accepted; Principal Contractor duties priced; arbitration deleted; Schedule of Amendments prevails; Third Party Agreements duties. Contract Particulars: arbitration entries removed; Rectification Period set at 12 months; fluctuations and certain PII/guarantee entries deleted. Conditions: key definitions revised (Practical Completion, Copyright Material, Design sub‑contractors, Funder, Site); Scottish jurisdiction; approvals mean principles only; entire agreement; variations in writing. Design/materials/programming: contractor accepts ER/CP; quality and non‑deleterious materials; programme reporting; site risk; drawings/info supply; tighter discrepancy notices. Time/defects: mitigate and advise on delay; narrower Relevant Events; Practical Completion clarified; stronger rectification, consequential damage and indemnity; phased as‑built/occupation information. IP/confidentiality/BIM: broader licence, moral rights waivers and delivery; confidentiality reinforced; BIM where adopted. Management/sub‑contracting: access, approved Site Manager, meetings; prescribed sub‑contracts; collateral warranties/third‑party rights; CDM duties; insurance...

ARCHIVED: This Precedent is archived and no longer being maintained...

Date [ date ] Parties [ name of mortgagee ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Seller) [ name of (first) Buyer ] [ and [ name of second Buyer ] both ] of [ address ] ([ together ] Buyer) 1 Definitions In this Agreement, the following terms shall have these meanings: Actual Completion Date – the day on which the Transfer is actually finalised; [ Buyer’s Solicitors – [ name ] of [ address ] (reference [ details ]); ] Completion Date – [ date ]; [ Contents – the items specified in Appendix 2; ] [ Contents Price – £[ amount in figures ] ([ amount in words ] pounds); ] Deposit – [ figure ]% of the Price; [ Documents – the documents identified in the Schedule; ] Legislation...

The Equality Act 2010 (EqA 2010) The Equality Act 2010 (EqA 2010) sets out measures to secure equality between men and women in pay and other employment terms where an employee’s work matches that of a comparator of the opposite sex. It accomplishes this by implying a sex equality clause into the employee’s contract of employment, ensuring that the contract reflects the comparator’s terms. This mechanism is intended to guarantee parity of conditions between the employee and their comparator...

Key legal issues for guarantees Guarantees constitute contracts and must accordingly meet the four essential elements of a contract, namely: offer acceptance consideration the intention to create legal relations As a rule in law, consideration given in the past is ordinarily insufficient. A firm ought not to take a guarantee once it has already agreed to supply services to a client in question. The guarantee must also comply fully with s.4 of the Statute of Frauds 1677. It must thus be recorded in writing and properly signed by the guarantor as required. The Firm should also be alert to potential claims of misrepresentation, duress, and undue influence. It is sound practice to see that the guarantor receives independent legal advice on the implications of giving the guarantee. Is the guarantee a regulated credit agreement? Where undertaken by way of business in the United Kingdom, entering into a regulated credit agreement may potentially amount to a regulated activity under...