Personal Guarantee Agreement Template and How to Draft One (2026)

What is a personal guarantee, and when do you need one? A personal guarantee is a promise by an individual to be responsible for another party's debt or obligation if that party fails to pay or perform. The individual who gives it is the guarantor or surety; the party whose obligation is guaranteed is the principal debtor; and the party who receives the guarantee is the creditor. A personal guarantee puts the guarantor's own assets, not just a company's, behind the obligation. You meet personal guarantees most often when a company borrows or takes on credit and the lender wants an owner or director to stand behind it: a bank loan to a small company, a commercial lease where the landlord wants the director to guarantee the rent, a supplier extending trade credit, or an equipment finance deal. Lenders ask for them because a company can be an empty shell, while an individual with assets is a real target for recovery. That is exactly why a guarantor should treat the terms with care. This article is general guidance, not legal advice. A personal guarantee can expose your home and savings, so have a qualified professional review one before you sign. ## Personal guarantee template Copy the block below and fill the bracketed fields. In some jurisdictions a guarantee is best executed as a deed; see the jurisdiction note. ```

PERSONAL GUARANTEE This Personal Guarantee ("Guarantee") is made on [DATE] BY: [GUARANTOR NAME], [address] ("Guarantor") IN FAVOUR OF: [CREDITOR NAME], [address] ("Creditor") in respect of [PRINCIPAL DEBTOR NAME] ("Principal Debtor") under [the Loan/Lease/Supply Agreement dated ...] (the "Underlying Agreement"). 1. GUARANTEE The Guarantor unconditionally guarantees to the Creditor the due and punctual payment and performance by the Principal Debtor of the Guaranteed Obligations under the Underlying Agreement. 2. GUARANTEED OBLIGATIONS AND LIMIT "Guaranteed Obligations" means [all / specified] amounts and obligations of the Principal Debtor under the Underlying Agreement. The Guarantor's total liability is capped at [AMOUNT] [plus interest and reasonable enforcement costs]. [If no cap: state so expressly.] 3. NATURE OF LIABILITY The Guarantor's liability is that of [primary obligor / surety]. The Creditor [must / need not] first pursue the Principal Debtor or any security before claiming against the Guarantor. 4. CONTINUING GUARANTEE This is a continuing guarantee and covers the ultimate balance owing. It is not discharged by partial payment. 5. PRESERVATION OF RIGHTS The Creditor may grant time or indulgence to the Principal Debtor, vary the Underlying Agreement or release security without discharging the Guarantor, [subject to clause 9]. 6. INDEMNITY As a separate obligation, the Guarantor indemnifies the Creditor against loss if any Guaranteed Obligation is or becomes unenforceable against the Principal Debtor. 7. PAYMENT On written demand, the Guarantor will pay the amount demanded within [N] days without set-off or deduction [except as required by law]. 8. TERM AND RELEASE This Guarantee continues until the Guaranteed Obligations are fully discharged. The Guarantor may stop future liability by [N] days written notice for obligations incurred after the notice period, [if the Underlying Agreement allows]. 9. GUARANTOR PROTECTIONS [Optional] The Creditor will notify the Guarantor of any default within [N] days; material variations that increase the Guarantor's exposure need the Guarantor's consent. 10. GOVERNING LAW AND DISPUTES Governed by the laws of [jurisdiction]; disputes to [courts]. Signed by the Guarantor: __________ [Witness / deed formalities]

- **Nature of liability (clause 3).** Decide whether the creditor must chase the main debtor first or can come straight to the guarantor. Guarantors prefer the creditor to exhaust the debtor and any security first; creditors prefer to come straight to the guarantor.
- **Preservation of rights (clause 5).** Creditors want freedom to vary the deal without losing the guarantee. A guarantor should resist unlimited variation and ask for consent to changes that increase exposure, because in some jurisdictions a material variation without consent can discharge a surety.
- **Term and release (clause 8).** A continuing guarantee can run for years. A guarantor should seek a way to cap future liability by notice, and a clear end point.
- **Guarantor protections (clause 9).** Ask for notice of default and a right to consent to risky changes. These are the terms a guarantor most often forgets to request. ## How a guarantor should negotiate (both sides) - **Creditor's side.** Wants a wide definition of guaranteed obligations, a primary-obligor structure, freedom to vary, an indemnity as backup, and payment on demand without set-off.
- **Guarantor's side.** Wants a monetary cap, a defined and narrow obligation, a right to insist the debtor and security are pursued first, consent to variations, notice of default, and a clean release when the debt is paid. A fair guarantee usually lands in the middle: a defined obligation, a cap, and consent for changes that increase the guarantor's risk. ## Common mistakes to avoid - Guaranteeing "all liabilities" with no cap, which exposes the guarantor to far more than the original deal.
- Not noticing an indemnity bolted on to the guarantee, which can make the guarantor liable even if the main debt is unenforceable.
- Ignoring joint and several wording, which can let the creditor recover the whole amount from one of several guarantors.
- Missing a spouse or asset issue, for example guaranteeing with jointly owned property.
- Not getting independent advice, which in some jurisdictions is a factor in whether the guarantee can later be challenged. ## A note on jurisdiction Guarantee law varies by jurisdiction. - **India.** A contract of guarantee is governed by Sections 126 to 147 of the Indian Contract Act, 1872. Under Section 126 a guarantee may be oral or written, though written is standard and far easier to prove. A surety is discharged in defined situations, for example by a variation made without consent (Section 133) or by the creditor releasing the principal debtor (Section 134).
- **England and Wales.** Section 4 of the Statute of Frauds 1677 means a guarantee is not enforceable unless it is in writing and signed by the guarantor or an authorised person. Guarantees are often executed as deeds.
- **Other common-law jurisdictions.** Many, including Australia, Ireland and Singapore, require guarantees to be in writing and signed, following the Statute of Frauds pattern. Across all of them, put the guarantee in writing, define the obligation and cap, and take local advice on execution formalities such as witnessing or deed requirements. Last verified October 2026. ## Where one contract workspace helps A template gets you a sound personal guarantee. The ongoing work is understanding and tracking the exposure: spotting an uncapped or 'all liabilities' clause before anyone signs, seeing whether an indemnity has been added, keeping linked documents such as the loan or lease and its guarantee together, and remembering when a guarantee can be released. Drafting, reviewing, tracking and governing a personal guarantee can live in one AI workspace tuned to how your company gives or takes guarantees, so a term that sits against the guarantor such as a missing cap or a hidden indemnity is flagged, a clause can be edited in plain language, and the guarantee stays linked to the underlying agreement with its key dates in view. [Adira](https://adiralaw.com) is one tool built around that single workspace. This template alone is enough to put a fair guarantee in place; a workspace just makes drafting, review and tracking one connected job.