A guarantee itself is an ancillary obligation, the responsibility of the surety being subordinated to the responsibility of the client. If, for any reason, the contracting entity`s responsibility for the performance of the guaranteed contractual obligations is met, the obligations of the surety are met. Indeed, Catalyst`s candidacy was successful. The judge noted that personal guarantee and compensation were rightly regarded as a “hybrid document in which some of the commitments are primary and some secondary.” It added that “the distinction between primary and secondary obligations is potentially essential, because if the personal guarantee [and compensation] is a real guarantee, the principle of co-existence applies and the surety is entitled to any defence available to the principal debtor”, in which case a right of formal notice. Nor does this sub-file contain documentation that a person or company guarantees a lender that the borrower will repay the loans borrowed by the lender. However, you will find guarantee documents for the repayment of loans in the Credit Guarantee and Compensation sub-file in the “Loan and Financing Documents” group in our corporate file. A personal guarantee is a written commitment by a third party (of the surety) to fulfill the obligations of one party to an underlying agreement (the principal debtor) in favour of the other part of the underlying agreement (of the beneficiary) if the principal debtor does not meet those obligations. Many warranty documents also include compensation. It is a widespread illusion that guarantees and compensation are one and the same thing.
However, compensation differs from guarantees in several respects, and this should be taken into account by those considering a guarantee which, in its provisions, includes compensation provisions. The conclusion of an agreement involving compensation or personal guarantee is a very serious matter. Clauses in agreements with personal compensation and guarantees may give significant commitments to the parties to these agreements. In general, anyone who has entered into a contract should seek legal advice on the nature of the treaty provisions and their impact on the rights and interests of the parties. This is particularly the case with clauses that create compensation and offer personal guarantees. D.