Directors’ Guarantee Agreement and Mini Clause
When Do I need to Use this Agreement?
If you do a credit search on a new client and find them not to have a good credit history or no credit rating as they are a new company, you can get a personal guarantee from the director(s) to protect your business.
Isn’t this really complicated?
No! This Guarantee document is as simple template agreement which allows someone/a business who is offering credit (the creditor) to a company to take a personal guarantee from a director of that company. The director will be promising to repay the creditor if the company does not pay the creditor.
I don’t want a fixed amount; can I amend it?
Yes, you can. This agreement can be customised so that the director makes an unlimited guarantee (not limited to a specific amount of money) or alternatively it can be limited to a maximum specified sum of money (e.g. limited to £1,000).
Do I have to wait until the company is insolvent or sue them before I use this guarantee?
No you don’t. This agreement also means that the creditor is not obliged to pursue the company directly or at first if they fail to pay but can enforce the guarantee by demanding that the director make repayment.
Can the Director(s) cancel the guarantee and what happens if that occurs?
The director can end the guarantee by giving 14 days’ notice to the creditor. However, the director will still be liable for guaranteeing repayment of any credit that the creditor has given to the debtor until that 14 days’ notice period has passed.
THIS DOCUMENT CONTAINS THE FOLLOWING: –
Ability to customise for unlimited or limited amounts of credit
Terms of guarantee
DO NOT USE THIS DOCUMENT IF YOU
Intend to create any form of actual credit agreement rather than a guarantee.
Want to create a guarantee for anything other than the repayment of money.
Need specialist documents for complex guarantees which are dependent on certain triggers only
Please note that this guarantee document does not include the actual credit agreement between the company and the creditor.
Is this Document Easy to Use?
Yes, it is! This is a MS Word document and is really easy to use. The document uses blue text to provide extra guidance and notes and green text where you will customise your document to suit the circumstances in which it is used. It’s a 5 minute job or less once ordered for most people.