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Guarantee In Loan Agreement for Nigeria

Guarantee In Loan Agreement Template for Nigeria

A comprehensive legal document governed by Nigerian law that establishes a guarantee relationship within a loan agreement, where a third party (the guarantor) commits to fulfilling the borrower's obligations if they default. The document outlines the scope of the guarantee, the rights and obligations of all parties, enforcement mechanisms, and includes specific provisions compliant with Nigerian banking regulations and contract law. It serves as a critical tool for risk mitigation in lending transactions and provides the lender with additional security for the loan.

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What is a Guarantee In Loan Agreement?

The Guarantee in Loan Agreement is a crucial document used in Nigerian lending transactions where additional security is required beyond the borrower's primary obligations. This document is typically employed when a lender requires extra assurance for loan repayment, particularly in high-value transactions or when the borrower's creditworthiness alone is insufficient. The guarantee agreement, governed by Nigerian law, comprehensively details the guarantor's obligations, including the scope of guarantee, payment terms, and enforcement mechanisms. It complies with the Banks and Other Financial Institutions Act (BOFIA) and other relevant Nigerian legislation, making it especially important for financial institutions, corporate lending, and major commercial transactions. The document includes specific provisions for both corporate and individual guarantors, addressing various scenarios of default and enforcement.

What sections should be included in a Guarantee In Loan Agreement?

1. Parties: Identifies all parties: the Lender, the Borrower, and the Guarantor(s)

2. Background: Explains the context of the loan agreement and the purpose of the guarantee

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

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

5. Scope of Guarantee: Defines exactly what obligations are covered by the guarantee

6. Nature of Guarantee: Specifies that this is a continuing guarantee and explains its characteristics

7. Guarantor's Representations and Warranties: Statements of fact and assurances given by the guarantor

8. Preservation of Rights: Establishes that the lender's rights against the guarantor are preserved despite various circumstances

9. Payments: Details how and when payments must be made under the guarantee

10. Costs and Expenses: Allocates responsibility for costs related to the guarantee

11. Duration and Release: Specifies when the guarantee terminates and conditions for release

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

13. Governing Law and Jurisdiction: Confirms Nigerian law applies and specifies jurisdiction for disputes

14. Execution: Signature blocks and execution formalities

What sections are optional to include in a Guarantee In Loan Agreement?

1. Security: Include when the guarantor is providing additional security beyond the guarantee itself

2. Corporate Guarantor Provisions: Include when the guarantor is a company, containing specific corporate representations and warranties

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

4. Currency Provisions: Include when the loan is in a foreign currency, addressing exchange rate risks

5. Assignment and Transfer: Include when parties want the ability to transfer their rights under the guarantee

6. Power of Attorney: Include when the lender requires power to perfect or enforce security

7. Financial Covenants: Include when the guarantor must maintain specific financial metrics

8. Guarantor Change of Control: Include when changes in guarantor ownership might affect the guarantee

What schedules should be included in a Guarantee In Loan Agreement?

1. Details of the Principal Agreement: Summary of the main loan agreement being guaranteed

2. Guaranteed Obligations: Detailed list of the obligations covered by the guarantee

3. Form of Demand: Template for making a demand under the guarantee

4. Guarantor Information: Details of guarantor's assets and financial position

5. Security Documents: List and copies of any related security documents

6. Corporate Authorizations: Copies of corporate approvals where guarantor is a company

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

Nigeria

Publisher

Ƶ

Document Type

Loan Agreement

Sector

Banking

Cost

Free to use
Relevant legal definitions








































Clauses






























Relevant Industries

Banking

Financial Services

Real Estate

Manufacturing

Oil and Gas

Agriculture

Construction

Retail

Technology

Infrastructure

Relevant Teams

Legal

Finance

Risk Management

Compliance

Credit Administration

Corporate Banking

Commercial Banking

Treasury

Operations

Documentation

Relevant Roles

Legal Counsel

Finance Manager

Credit Risk Officer

Loan Officer

Compliance Officer

Banking Relationship Manager

Corporate Finance Director

Chief Financial Officer

Credit Analyst

Legal Director

Contract Manager

Risk Management Officer

Treasury Manager

Industries








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