A guarantee is secondary — it depends on the underlying obligation and falls away with it. An indemnity is primary and survives circumstances that would discharge a guarantee. Serious documents contain both, which is why this one does. The guarantor should understand that difference before signing, not afterwards.
Guarantee and Indemnity
Given by [GUARANTOR] in favour of [BENEFICIARY]
A guarantee is secondary — it depends on the underlying obligation and falls away with it. An indemnity is primary and survives circumstances that would discharge a guarantee. Serious documents contain both, which is why this one does. The guarantor should understand that difference before signing, not afterwards.
| Item | Detail |
|---|---|
| Guarantor | [NAME], [NRIC / UEN] [NUMBER], of [ADDRESS] |
| Beneficiary | [NAME], UEN [UEN] |
| Principal debtor | [NAME], UEN [UEN] |
| Guaranteed obligations | [DESCRIBE — the facility, lease or supply agreement dated ______] |
| Limit of liability | S$ [AMOUNT] plus interest and costs — or state "unlimited" if that is genuinely intended |
| All monies guarantee? | [Yes — covers future obligations too / No — limited to the stated agreement] |
| Duration | [Until the guaranteed obligations are discharged / Until ______] |
| Guarantor may terminate? | [Yes, on ______ notice as to future obligations / No] |
| Independent advice taken | [DATE] — certificate at Annexure A |
| Governing law | Singapore |
1. Guarantee
1.1The Guarantor irrevocably and unconditionally guarantees to the Beneficiary the due and punctual performance by the Principal Debtor of the Guaranteed Obligations.
1.2If the Principal Debtor fails to pay any sum when due, the Guarantor shall pay that sum on written demand, as if it were the principal obligor.
1.3The Guarantor’s liability under this Clause is limited to S$ [AMOUNT], together with interest and the Beneficiary’s reasonable enforcement costs.
2. Indemnity
2.1As a separate and independent primary obligation, the Guarantor indemnifies the Beneficiary against any loss, cost or liability arising where any Guaranteed Obligation is or becomes unenforceable, invalid or illegal, or is otherwise not recoverable from the Principal Debtor.
2.2The amount recoverable under this Clause shall not exceed the amount the Beneficiary would have recovered under Clause 1 had the obligation been enforceable.
2.3Clause 2 exists because a guarantee can be discharged by events outside the guarantor’s control — a variation of the underlying contract, the debtor’s incapacity, a defect in the principal obligation. The indemnity survives those. It is not duplication.
3. Continuing Security and Preservation
3.1This guarantee is a continuing security and extends to the ultimate balance owing, regardless of any intermediate payment or settlement of account.
3.2The Guarantor’s liability is not discharged or affected by:
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This is page 1 of the Word document, exactly as it appears when you open it. Fields shown like THIS are placeholders for you to complete.
These notes accompany the template and explain the drafting choices, the compliance points and the mistakes most often made with this document. They appear as a final page in the Word file, intended to be deleted before the document is executed.
A guarantee is secondary: it depends on the underlying obligation and is discharged if that obligation fails. An indemnity is a primary obligation that survives. A document containing only a guarantee can be defeated by a defect in the principal contract or by a variation made without consent. Clause 2 is not duplication.
Clause 3.2 means the guarantee survives variations, extensions, increases and the release of other security — all without the guarantor’s consent. Without such a clause a material variation would generally discharge the guarantee. Guarantors should ask for a cap or a consent requirement; beneficiaries should expect the request.
It protects the guarantor by ensuring they understood, and it protects the beneficiary by defeating later arguments about undue influence, misrepresentation and non-disclosure. Those arguments succeed more often than lenders expect, particularly with personal guarantees from directors, spouses and family members. Annexure A costs little and is worth a great deal.
Where a guarantor gains no direct benefit and the relationship is one of trust and reliance, the risk of a successful challenge rises sharply. Separate advice, given in the absence of the person who benefits, is close to essential.
A guarantee expressed to cover all present and future liabilities of the debtor continues to cover facilities entered into years later, long after the guarantor has stopped paying attention. Guarantors should push to confine the guarantee to the identified agreement; the difference in exposure is enormous.
A director who guarantees a company facility and then leaves, or sells their shares, frequently remains bound for years afterwards. Building in a release on departure, or a right to terminate as to future obligations on notice, is one of the most valuable things a guarantor can negotiate. Clause 6.2 provides the mechanism.
Where a company guarantees the obligations of a parent or sister company, its directors must be satisfied that giving the guarantee is in the guarantor company’s own interests. Upstream and cross-stream guarantees are the ones most often challenged, and the directors carry the exposure. Record the board’s reasoning.
Where the guarantor receives no consideration directly, executing as a deed avoids an argument about whether the guarantee is supported by consideration. It also extends the limitation period. Execution formalities for a deed must be followed properly, including witnessing.
Clause 4.1 permits the beneficiary to come straight to the guarantor. Guarantors frequently assume the beneficiary must exhaust the debtor and the security first. It does not, unless the guarantee says so — which is why that protection appears in the Section 6 table.
Clause 5.1 prevents the guarantor recovering from the debtor until the beneficiary has been paid in full. A guarantor who pays part of the debt cannot immediately claim it back from the debtor in competition with the beneficiary, and any recovery is held on trust.
Where a payment made by the debtor is later avoided or clawed back in its insolvency, the guarantor’s liability revives. A guarantor who believed the matter closed can find it reopened long afterwards. Clause 5.3 states it expressly so it is not a surprise.
Where several people guarantee, each is usually liable for the whole amount and the beneficiary can choose whom to pursue. A guarantor expecting to be liable only for their share should ask for several liability or an express right of contribution.
Question 12 — could you actually pay this tomorrow — is the one that matters. Guarantees are given optimistically, at the start of a relationship, and called in at the worst point of it. The exposure should be one the guarantor could survive.
Depending on how a guarantee is structured and whether it is combined with security over property or shares, stamp duty or registration may be relevant. Check the position before execution rather than at enforcement.
Reflects Singapore law current as of {{DATE OF USE}}. The law on guarantees, undue influence and non-disclosure develops through case law, and requirements on deeds, stamp duty and charge registration change — both parties should take legal advice before a material guarantee is given, and a guarantor should never sign one on the strength of a template alone.
This is a ready-to-use template provided for convenience. Laws and requirements change, and every situation is different — please have it reviewed by a qualified professional (a lawyer, corporate secretary, or accountant as relevant) before you rely on it.