What is a personal guarantee? A personal guarantee is an agreement whereby the Guarantor agrees to repay the debts of another person (the Debtor) to a lender (the Creditor). Typically the bank will be the Creditor to whom money is owned by a borrower, the Debtor.
Like many matters and agreements connected with financial institutions, the devil is in the detail. For an in-depth analysis of the dangerous and insidious clauses contained in many so called “standard” banking guarantees, please see article by Fergal McManus in Articles Section of the Morgan McManus website at https://www.morganmcmanus.com/
The most practical advice one can give to a client thinking of giving a personal guarantee is not to do it. It is not always possible to avoid personal guarantees, especially for business people. For a practical overview I also recommend the following http://realbusiness.co.uk/finance/personal_guarantees_the_needtoknows while it relates to the UK, the same practical issues pertain in Ireland.
Always obtain independent legal advice before giving a personal guarantee. Even better, avoid giving one in the first place if at all possible. Taking legal advice provides you with an opportunity to understand fully your commitments and perhaps to limit you liability through negotiation with the bank by your solicitor. At the very least always insist on an agreement with the Lender as to when your responsibility under the Guarantee will cease.
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