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Personal or Corporate Guarantee A personal
guaranty should not be included within the body of the credit application.
It must be provided for separately and apart from the application, and
it must include a separate signature by the individual guarantor. The
guarantee can appear after the application signature line, as a separate
section, provided that it is conspicuously labeled as a guarantee and
provided there is a separate signature line. Keep in mind the separation
of the application, which is signed by a firm, and a personal guaranty,
which is signed by an individual. Laws will
not permit a credit grantor to require (you can request, however) a spouse
to sign a personal guaranty if that spouse is not directly involved with
the business credit applicant. Care must be taken to make sure that there
are policies established for dealing with this that there is not an accidental
dark-compliance. The law does permit the requirement for a spouse to sign
a personal guaranty if detailed procedures are followed to first verify
that the participant spouse does not have the financial credibility or
credit wherewithal to support a guaranty. Once that has been independently
established, and if the credit were to then be turned down because of
the lack of sufficient creditworthiness of the guarantor, the guaranty
of the spouse may then be required. This is a
very complicated procedure and competent counsel should be consulted in
order to establish the appropriate policies and procedures for each company. If a guarantee
of another corporation, an affiliated corporation, a parent or a subsidiary
is obtained, always get a copyof the corporate resolution authorizing
it. A parent corporation can guarantee the debt of its subsidiary. The
official corporate seal should be placed on the documents. Remember, that
for the guaranteeing corporation, they assume a contingent liability for
the subsidiary, so the ability for a creditor to obtain this document
is not always easy. Checklist for the Personal Guaranty—
Sample language can be: The undersigned individual(s) in consideration of the company’s extension of credit to the applicant hereby agrees to personally guarantee any and all obligations of the applicant and the company. This guaranty shall be continuing and unlimited and may be terminated only on 30 days’ written notice to the company. The company may exercise its rights under this guaranty without first taking any action against the applicant. The undersigned waives notice of default and non-payment, and consents to the extension or modification of credit terms to the applicant without notice. Dated Witness
Guarantor Sample language can be: This guaranty
is given by the undersigned to seller, in order to induce and extend credit
to, sell goods to, or otherwise become the creditor of, the above-named
sole proprietorship or corporation. I hereby
guaranty to seller, the prompt payment, in accordance with the terms of
credit, of every claim of seller, including claims relating to goods sold,
open accounts and accounts stated, against the above-named sole proprietorship,
partnership or corporation. This is a continuing guaranty and shall remain
in force until revoked by the written consent of seller. This obligation
shall cover the renewal of any claims guaranteed by those affected by
any surrender or release by the seller of any security held by it for
any claim hereby guaranteed. The undersigned
additionally guarantees the payment of interest at the maximum lawful
rate on all monies outstanding to seller, by the above-named sole proprietorship,
partnership or corporation, together with costs and reasonable attorney
fees whether suit be brought or not and any attorneys' fees on appeal,
which the seller may incur in the collection of any claims. Further, the
undersigned hereby submits himself (or herself) to the jurisdiction of
the course of [STATE] in the event suit is brought in connection with
any claims by seller regarding the guaranty of payment, and agrees that
venue shall be in the county where seller has its principle place of business.
It is understood and agreed by the undersigned that this personal guaranty
shall remain in full force and effect regardless of whether the above-named
corporation, partnership or sole proprietorship files bankruptcy, becomes
insolvent or is otherwise dissolved. The guarantor signature(s) below must be dated and witnessed. In witness whereof, I/We have signed, sealed and delivered this guaranty for the purposes set forth above on the day of , .
Witness to Guarantor Guarantor (husband), with personal liability
Witness to Guarantor Guarantor (wife), with personal liability Please sell
and deliver to [applicant name/purchaser], or representatives, pursuant
to the terms and conditions of sale contained in this credit application
incorporated herein by reference and made a part hereof, such merchandise
as they or their management may order or select, and in consideration
thereof, the undersigned (Guarantor(s), which shall include guarantor,
of only one, and Guarantors if more than one) hereby fully guarantee and
agree that the Guarantor(s) shall be personally responsible, jointly and
severally for the payment at maturity of the purchase price of all such
merchandise so sold or delivered whether by open account acceptance When
a drawee acknowledges in writing on the face of the draft that the buyer
will pay the draft at maturity., note or otherwise. The Guarantor(s) hereby
waive notice of acceptance hereof, amounts of sale, dates of shipments
or deliveries, notice of default in payment and legal proceedings against
Purchaser. Guarantor(s) acknowledge that the Guaranty is a condition for the extending credit to Purchaser. This is intended to be, and shall be construed to be, a Continuing Personal Guaranty (“Guaranty”) applying to all sales made by Seller to Purchaser and shall not be revoked by 1. the death of the Guarantor(s) 2. the sale or transfer of Purchaser subsequent to the execution of this Guaranty; or 3. the departure, resignation and/or disassociation for any reason, of Guarantor(s) from the Purchaser. This Guaranty shall remain in full force and effect until the Guarantor(s) shall have given notice in writing to Seller to make no further advances on the security of this Guaranty, and until such notice shall have been received by an authorized agent of Seller. Unless Seller agrees in writing otherwise, this Guaranty shall extend to the transactions between Seller and Purchaser, as well as any successor or related business entities or to any other business entity in which the undersigned owns or holds an interest. Guarantor(s) agree to notify Seller in writing of any changes in the form of the Purchaser's business or ownership of Purchaser's business within five days of such change, otherwise this Guaranty shall extend to Purchaser, and any successor companies, individuals or assignees, or related entities, as a condition of maintaining an open account with Seller. The obligation of the Guarantor(s), where more than one, shall be joint and several, and the death, discontinuance or discharge for any reason as to one or more of the undersigned shall not operate as a discontinuance or discharge as to the other or others. It is understood and agreed that the Guarantor(s) liability under this Guaranty shall be unlimited. The undersigned consents to an investigation into the creditworthiness of the Guarantor(s) and further agrees to dissemination of credit information about Guarantor(s) to inquiring sources. In witness whereof, the undersigned hereby executes the Guaranty this day of , . Do not use corporate or business titles, as they are inapplicable. |
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