About this document
A cross guarantee allows one or more companies within a group to guarantee the obligations of one or more of the other members as set out in a named, identifiable contract.
Such an arrangement is common where a subsidiary wishes to borrow from a lender but doesn’t meet the criteria for the loan (such as having sufficient capital reserves or free cash flow, or being within a particular jurisdiction). The parent company and the other subsidiaries, that together meet the criteria, step in to guarantee the repayment of the debt.
This agreement gives strong legal protection for the party that requires the guarantee.
It could be put in place at the same time as the original contract or later to supplement an existing one when circumstances change (such as a change in ownership).
Such an agreement is most often used to guarantee the repayment of a debt, but a cross guarantee could be used to cover any contractual obligation.
The document also provides options for variation of the terms of the main agreement.
It can be used in conjunction with any other contract, including in situations where the group companies are outside the UK.
This document may be signed as a deed (without consideration), or as a simple agreement under hand, as the notes explain.
The law in this document
There is no statute law relating to guarantees that limits the arrangements you can make. This document is based on common contract law.
Alternative documents
If your situation is one where the guarantor is not a member of the same group of companies, or where you want specifically to guarantee performance rather than repayment of a debt, look at our cross guarantee agreement.
Net Lawman also offers other document templates related to guarantees and indemnities.
Application and main features
- The guarantees
- Continuing liability
- Additional lender safeguards
- Covers payments received from foreign based subsidiaries
- Lender’s right to assign
- Other necessary legal provisions
This document was written by a solicitor for Net Lawman. It complies with current English law.
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