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Guarantee Agreement For Loan Template for Philippines

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Key Requirements PROMPT example:

Guarantee Agreement For Loan

"I need a Guarantee Agreement for Loan under Philippine law where three subsidiary companies will jointly guarantee a PHP 50 million corporate loan to their parent company, with the guarantee period starting March 1, 2025."

Document background
The Guarantee Agreement For Loan is a crucial document in Philippine financial transactions, commonly used when a third party (guarantor) provides additional security for a borrower's loan obligations. This agreement becomes necessary when a lender requires extra assurance beyond the borrower's creditworthiness, particularly in large commercial loans, real estate financing, or corporate borrowing. The document must comply with Philippine civil law requirements and banking regulations, especially the Civil Code provisions on guaranty and the General Banking Law of 2000. It typically includes detailed terms about the guarantee's scope, enforcement mechanisms, guarantor's obligations, and remedies available to the lender. The agreement is particularly important in the Philippine context where family-owned businesses often provide cross-guarantees for corporate loans, and where parent companies frequently guarantee subsidiaries' obligations.
Suggested Sections

1. Parties: Identifies and defines all parties to the agreement: the Guarantor, the Lender (beneficiary), and the Borrower (principal debtor)

2. Background: Recitals explaining the context of the guarantee, including details of the underlying loan agreement

3. Definitions: Defines key terms used throughout the agreement, including 'Guaranteed Obligations', 'Event of Default', and other relevant terms

4. Guarantee and Indemnity: Core section detailing the scope of the guarantee, including the guarantor's obligations and the maximum liability amount

5. Nature of Guarantee: Specifies that the guarantee is continuing, irrevocable, and unconditional (subject to terms)

6. Representations and Warranties: Guarantor's confirmations regarding their capacity, authority, and financial condition

7. Preservation of Rights: Lender's rights to enforce the guarantee and circumstances that do not affect the guarantee's validity

8. Payments: Terms for how and when payments must be made, including currency, method, and dealing with taxes

9. Costs and Expenses: Allocation of costs related to the preparation, enforcement, and amendment of the guarantee

10. Notices: Procedure for giving notices under the agreement, including addresses and acceptable methods

11. Governing Law and Jurisdiction: Confirms Philippine law as governing law and specifies jurisdiction for disputes

Optional Sections

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

2. Multiple Guarantors: Include when there are multiple guarantors, defining joint and several liability

3. Assignment and Transfer: Include when parties want to specifically allow or restrict the ability to assign or transfer rights

4. Corporate Guarantor Provisions: Include when the guarantor is a corporation, with specific representations about corporate authority

5. Limitation of Liability: Include when there is a need to cap the guarantor's maximum liability

6. Step-In Rights: Include when the guarantor is given rights to step into the borrower's position

7. Financial Covenants: Include when the guarantor must maintain certain financial ratios or conditions

Suggested Schedules

1. Schedule 1 - Form of Demand: Standard form for making a demand under the guarantee

2. Schedule 2 - Underlying Loan Agreement: Copy or key terms of the loan agreement being guaranteed

3. Schedule 3 - Security Details: Details of any security or collateral (if applicable)

4. Schedule 4 - Guarantor Information: Detailed information about the guarantor, including address and contact details

5. Schedule 5 - Conditions Precedent: List of documents and conditions required before the guarantee becomes effective

6. Appendix A - Required Notices: Forms of notices required under the agreement

7. Appendix B - Payment Details: Bank account and payment information for making payments under the guarantee

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

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Relevant Industries

Banking

Financial Services

Real Estate

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Legal

Finance

Treasury

Compliance

Risk Management

Corporate Secretariat

Credit Administration

Corporate Banking

Commercial Banking

Document Control

Relevant Roles

Chief Financial Officer

Finance Director

Legal Counsel

Corporate Lawyer

Banking Officer

Credit Risk Manager

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Treasury Manager

Corporate Secretary

Risk Officer

Managing Director

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