Corporate Guaranty
(Secured Loan Transaction)

Summary

This template is a continuing guaranty of payment by a single corporate guarantor in favor of a lender. This template includes practical guidance, drafting notes, and alternate clauses. There is disagreement about whether a guaranty is best embedded in the document in which the underlying debt is evidenced or, alternatively, contained in a separate instrument. If the guaranty appears as a part of the loan document, it is less likely that the guarantor will succeed in asserting that it was unaware of the nature, extent or terms governing the primary obligor's obligations. Moreover, in some states such as New York, there are procedural advantages to a debt and its guaranty being embodied in the same document. Even so, some authorities prefer the guaranty appearing in a separate document accompanying the loan, rather than on the evidence of the loan. When a guaranty is embodied in a document separate from the evidence of the loan, it is important that any conditions relating to the guaranty, such as the delivery of supporting documentation, be expressed as a condition to the making of the loan and not as a condition to the effectiveness of the guaranty. The following is a checklist describing lenders’ due diligence on guarantors. For a full list of key content on guaranties, see Guaranties Resource Kit. For more guidance on guaranties, see Enforceability and Types of Guaranties and Joint, Several, and Joint and Several Liability in Loan Documents.