Loan Guarantee to a Bank (Covering Continuing Obligations ).
To :( name of bank ) of :( address of bank )
IN CONSIDERATION of your from time to time making or continuing loans or advances to or coming under liabilities or discounting bills for or otherwise giving credit or granting banking facilities or accommodation or granting time to or on account of (name of principal debtor ) of (address of principal debtor ) (the Principal )
NOW [I (or ) WE] (full and correct name(s ) of guarantor(s ) ) of:(full and correct address(es ) of guarantor(s ) ) (the Guarantor[s] ) UNCONDITIONALLY GUARANTEE TO AND AGREE WITH YOU as follows:
1 Guarantor to pay on demand
The Guarantor[s] must pay to you on demand:
1.1 all money (1 ) that is now or shall at any time or times hereafter be due or owing to you from or payable to you by the Principal under or in respect of any dealing, transaction or engagement whatsoever, either solely or jointly with any other person, firm or company and whether as principal or guarantor, and whether upon current account or other banking account or accounts or otherwise or in respect of bills, drafts, notes or other negotiable instruments made, drawn, accepted, advised, endorsed or paid by you or on your account for the Principal, either solely or jointly as stated above, or (2 ) that you may from time to time become liable to pay in respect of any bills, drafts, notes or letters of credit or any other dealing, transaction or engagement on account of or for the benefit or accommodation of the Principal, either solely or jointly as stated above (?the Indebtedness ); together with
1.2 all interest, costs, commissions and other banking charges and expenses that you may in the course of your business as bankers charge against the Principal and all legal and other costs, charges and expenses that you may incur in enforcing or obtaining payment of any such money from the Principal, or attempting so to do;
[(if the guarantee is to be limited ) PROVIDED that the total amount recoverable from the Guarantor[s] under this guarantee shall not exceed....... (insert amount ) together with a further sum for all interest, costs, commissions and other costs, charges and expenses as stated above as shall have accrued or shall accrue due to you at any time before or at any time after the date of such demand as stated above and PROVIDED that if the amount in this paragraph is not completed, this guarantee shall be interpreted as unlimited.
(the last provision deals with the possibility of this proviso being included but the amount being left blank )]
2 Continuing security
This guarantee shall be a continuing security (subject only to such notice as is mentioned below ) and shall not be satisfied, discharged or affected by any intermediate payment or settlement of account.
3 Effect of death of guarantor
This guarantee shall not be determined or affected by the death of [the Guarantor (or ) any one or more of the persons constituting the Guarantors].
4 Notice to determine guarantee
(this provision is designed (1 ) to ensure that the guarantor remains liable for indebtedness to the bank incurred by the principal debtor during the period after notice to determine has been served, eg cheques drawn before service of the notice but honoured after it and (2 ) so that the guarantee continues to apply to advances made by the bank after termination pursuant to a commitment entered into before termination )
4.1 [The Guarantor or his personal representatives (or ) Any one or more of the Guarantors or any survivor or survivors of the Guarantors or the personal representatives of any deceased Guarantor] may at any time give you notice in writing to determine this guarantee at a date not less than 3 calendar months after the receipt by you of the notice.
4.2 This guarantee shall cease with respect to transactions after the date set by any notice served under clause 4.1 above PROVIDED that the Guarantor shall remain liable under this guarantee:
4.2.1 in respect of all obligations of the Principal to you outstanding at that date, with interest on such obligations until actual payment at the rate charged by you against the Principal;
4.2.2 in respect of all money, interest, costs, commissions and other banking charges and expenses that will or may become due to you from the Principal under or in respect of any dealing, transaction or engagement effected or entered into either prior to that date or on or after that date pursuant to any commitment, express or implied, assumed or undertaken by you to the Principal prior to that date; and
4.2.3 for all legal and other costs, charges and expenses you may incur in respect of any matters mentioned in clauses 4.2.1 or 4.2.2 above.
The obligation of the Guarantor[s] under this guarantee shall be to make payment to you [(where obligations in currencies other than Naira are being guaranteed ) (in the currency in which the applicable obligation ought to have been or ought to be discharged by the Principal )] strictly in accordance with the terms and provisions of any agreement or agreements, express or implied, between you and the Principal applicable to each respective obligation of the Principal, regardless of any law, regulation or decree, now or hereafter in effect, that affects or might in any manner affect any of those terms or provisions or your rights as against the Principal.
6 New account
It shall be lawful for you at any time after notice to determine this guarantee has been given or after payment of the money guaranteed hereby has been demanded of the Guarantor[s] to continue any existing account or accounts or to open any new account or accounts with the Principal and no money subsequently paid into such account or accounts shall be appropriated in discharge of any money guaranteed hereby unless it has been expressly directed by the person paying the same at the time of the payment to be so appropriated.
7 Effect of Principals insolvency
7.1 The bankruptcy, liquidation or insolvency of the Principal or the presentation of a petition for the making of an administration order in respect of the Principal or the making of any such order shall not affect or determine the liability of the Guarantor[s] under this guarantee.
7.2 All dividends, compositions and money received by you from the Principal or from any other company, person or estate capable of being applied by you in reduction of the Indebtedness shall be regarded for all purposes as payments in gross and you shall be entitled to prove in the bankruptcy, liquidation or insolvency of the Principal in respect of the whole of the Indebtedness and without any right of the Guarantor[s] to be subrogated to you in respect of any such proof to the intent that this guarantee shall apply to and secure the whole of any ultimate balance that shall remain due to you.
8 Proviso to settlement or discharge
Any settlement or discharge between you and the Guarantor[s] shall be subject to the condition that no security or payment to you by the Principal or any other person shall be avoided or reduced by virtue of any provisions or enactments relating to administration, bankruptcy, liquidation or insolvency for the time being in force and if any such security or payment shall be so avoided or reduced you shall be entitled to recover the value or amount of it from the Guarantor[s] subsequently just as if such settlement or discharge had not occurred.
9 Effect of other guarantees etc.
This guarantee and your rights under it shall be in addition to and shall not be in any way prejudiced or affected by any one or more other securities or guarantees for the Principal that you may now or subsequently hold whether from [the Guarantor (or ) any of the Guarantors] or from any other person.
10.1 You may at any time and without reference to the Guarantor[s] refuse further credit to the Principal.
10.2 The liability of the Guarantor[s] under this guarantee shall be unaffected by any arrangement you may make with the Principal or with any other person that might (but for this provision ) operate to diminish or discharge the liability of or otherwise provide a defence to a guarantor.
10.3 Without prejudice to the generality of the above you may at any time and without reference to the Guarantor[s]:
10.3.1 give time for payment or grant any other indulgence;
10.3.2 give up, deal with, vary, exchange or abstain from perfecting or enforcing any other securities or guarantees held by you at any time and discharge any party to them or any of them, and realise such securities or guarantees or any of them, as you think fit; and
10.3.3 compound with, accept compositions from and make any other arrangements with the Principal or any person or persons liable on bills, notes or other securities or guarantees held or to be held by you
Without affecting the [Guarantors (or ) Guarantors] liability under this guarantee.
11 Resorting to other means of payment
You are to be at liberty but not bound to resort for your own benefit to any other means of payment at any time and in any order you think fit without in consequence diminishing the liability of the Guarantor[s] and you may enforce this guarantee either for the payment of the ultimate balance after resorting to other means of payment or for the balance due at any time notwithstanding that other means of payment have not been resorted to and in the latter case without entitling the Guarantor[s] to any benefit from such other means of payment so long as any money remains due or owing or payable (whether actually or contingently ) from or by the Principal to you.
12 No proof in competition with bank
12.1 This guarantee shall take effect as a guarantee of the whole and every part of the Indebtedness and accordingly the Guarantor[s] shall not be entitled as against you:
12.1.1 to any right of proof in the bankruptcy, liquidation or insolvency of the Principal or any other guarantor; or
12.1.2 to any other right of a guarantor (including any right of contribution from any other guarantor ) discharging, in whole or in part, his liability in respect of the Indebtedness; or
12.1.3 to share in any security held or money received by you on account of the obligations of the Principal or any other guarantor; or
12.1.4 to have or exercise any rights as guarantor (including any right of contribution from any other guarantor ) in competition with you unless and until the whole of the Indebtedness shall have first been completely discharged and satisfied.
12.2 Until the Indebtedness shall have been discharged and satisfied in full, the Guarantor[s] shall not, if any money shall have become payable or shall have been paid by [him (or ) them] under this guarantee, take any step to enforce repayment or to exercise any other rights, claims or remedies of any kind that may accrue howsoever to [him (or ) them] (including any right of contribution from any other guarantor ) in respect:
12.2.1 of the amount so payable or so paid or
12.2.2 of any other money for the time being due to the Guarantor[s] from the Principal or any other guarantor
PROVIDED that in the event of the bankruptcy, liquidation or insolvency of the Principal or any other guarantor the Guarantor[s] shall, if so directed by you but not otherwise, prove for the whole or any part of the money due to the Guarantor[s] from the Principal or any other guarantor mentioned in clauses 12.2.1 and 12. 2.2 above on terms that the benefit of such proof and of all money to be received by the Guarantor[s] in respect thereof shall be held in trust for you and applied in discharging the obligations of the Guarantor[s] to you under this guarantee.
12.3 To enable you to sue the Principal or any other guarantor or prove in the bankruptcy, liquidation or insolvency of the Principal or any other guarantor for the whole of the money mentioned in clause 12.1 above, or to preserve intact the liability of any other party, you may at any time place and keep, for such time as you may think prudent, any money received, or realised under this guarantee or under any other guarantee or security to the credit of the Guarantor[s] or any other person or transaction (if any ) as you shall think fit, without any intermediate obligation on your part to apply the same or any part of it in or towards the discharge of the Indebtedness, or any intermediate right on the part of the Guarantor[s] to sue the Principal or any other guarantor or to prove in the bankruptcy, liquidation or insolvency of the Principal or any other guarantor in competition with or so as to diminish any dividend or other advantage that would or might come to you, or to treat the liability of the Principal or any other guarantor as diminished.
12.4 As used in this clause and clause 15 below, the expression any other guarantor includes [any person constituting the Guarantors and] any party or person referred to in clause 10 above.
13 Evidence of amount due
For all purposes including any legal proceedings a copy of any account of the Principal in your books signed by any of your officers shall be accepted by the Guarantor[s] as conclusive evidence of the state of such account.
14 Change in constitution of principal or guarantor[s]
If the Principal or [the Guarantor (or ) any of the Guarantors] is a partnership or a company, this guarantee shall remain in full force and effect notwithstanding any change in the constitution of the Principal or [the Guarantor (or ) any of the Guarantors].
15 No security received by guarantor[s]
15.1 The Guarantor[s] declare that no security has been received by [him (or ) them] from the Principal or any other guarantor for the giving of this guarantee
15.2 The Guarantor[s] agree that [he (or ) they] will not, so long as this guarantee remains in force, take any security in respect of the [his (or ) their] liability under this guarantee without first obtaining your written consent.
16 Money not recoverable on footing of guarantee
As a separate and independent stipulation it is agreed by the Guarantor[s] that any money mentioned in clause 1 above that may not be recoverable on the footing of a guarantee, whether by reason of any legal limitation, disability or incapacity on or of the Principal or any other fact or circumstance, and whether known to you or the Guarantor[s] or not, shall nevertheless be recoverable from the Guarantor[s] as sole or principal debtor in respect of it and shall be paid by the Guarantor[s] on demand.
17 Change in banks constitution or its amalgamation etc.
This guarantee shall continue to bind the Guarantor[s] notwithstanding any amalgamation or merger that may be effected by you with any other company or companies and notwithstanding any reconstruction by you involving the formation of and transfer of the whole or any part of your undertaking and assets to a new company and notwithstanding the sale or transfer of the whole or any part of your undertaking and assets to another company, whether the company or companies with which you amalgamate or merge or the company or companies to which you transfer the whole or any part of your undertaking and assets either on a reconstruction or sale or transfer as stated above shall or shall not differ from you in their or its objects, character or constitution, it being the intent of the Guarantor[s] that this guarantee shall remain valid and effectual in all respects in favour of, against and with reference to, and that the benefit of this guarantee and all rights conferred upon you by this guarantee may be assigned to and enforced by, any such company or companies and proceeded on in the same manner to all intents and purposes as if such company or companies had been named in this guarantee instead of and/or in addition to you.
[18 Other currencies
(where obligations in currencies other than Naira are being guaranteed )
If, at the time any demand is made under this guarantee, any amount shall be due or owing or payable to you from the Principal in any currency or currencies other than that in which any limit contained in the proviso to clause 1 above is expressed, then:
18.1 the obligation of the Guarantor[s] shall be to make payment in the currency or currencies in which the amount is due or owing or payable but you shall be entitled, at your discretion, to require payment either in that currency or those currencies or in the currency of such limit, or partly in one way and partly in the other, and
18.2 such limit shall be treated as a limit expressed in such other currency or (if more than one such other currency is involved ) as a limit in the aggregate expressed in such other currencies and for this purpose such limit shall be deemed to have been expressed in such other currency or currencies converted at the rate of respective rates of exchange to be determined in good faith by you to be effective at the date of payment (or each respective payment ) by the Guarantor[s].]
19 Payments by guarantor[s]
19.1 Each payment to be made by the Guarantor[s] under this guarantee shall be made to you in the appropriate currency in accordance with the terms of this guarantee, to the credit of your account with whichever bank or banks located in the country of such currency, as shall be designated by you.
19.2 All such payments shall be made in full without set-off or counterclaim [(where the guarantor is situated outside Nigeria ) and free and clear of and without deduction of or withholding for or on account of any tax of any nature now or subsequently imposed by any country or any subdivision or taxing authority of or in any country or any federation or organisation of which any country is a member.]
[(where the guarantor is situated outside Nigeria )
19.3 If any such payment shall be subject to any such tax or if the Guarantor[s] shall be required to make any such deduction or withholding, the Guarantor[s] must pay such tax, ensure that such payment, deduction or withholding will not exceed the minimum legal liability for it and simultaneously pay to you such additional amount as may be necessary to enable you to receive, after all such payments, deductions and withholdings, a net amount equal to the full amount payable under this guarantee.
19.4 If the Guarantor shall make any such payment, deduction or withholding the Guarantor shall within 30 days forward to you an official receipt or other official documentation evidencing such payment or the payment of such deduction or withholding.
19.5 As used in this clause the term tax includes all levies, imposts, duties, charges, fees, deductions, withholdings, stamp duties and any restrictions or conditions resulting in a charge.]
(where obligations in currencies other than Naira are being guaranteed and there is a real likelihood of the guarantee being sued on in a foreign court )
20.1 The Guarantor[s] agree that if any judgment or order is given or made for the payment of any amount due under this guarantee expressed in a currency other than that in which such amount is payable by the Guarantor[s] under this guarantee, the Guarantor[s] will indemnify you against any loss incurred by you as a result of any variation having occurred in rates of exchange between the date as at which the amount is converted into such other currency for the purpose of the judgment or order and the date of actual payment pursuant to it.
20.2 This indemnity shall:
20.2.1 constitute a separate and independent obligation of the Guarantor[s];
20.2.2 apply irrespective of any indulgence granted to the Guarantor[s] from time to time; and
20.2.3 continue in full force and effect notwithstanding any such judgment or order as mentioned above.]
21 No waiver of rights under guarantee
21.1 No delay or omission on your part in exercising any right, power, privilege or remedy in respect of this guarantee shall impair such right, power, privilege or remedy or be construed as a waiver of it nor shall any single or partial exercise of any such right, power, privilege or remedy preclude any further exercise of it or the exercise of any other right, power, privilege or remedy.
21.2 The rights, powers, privileges and remedies provided in this guarantee are cumulative and not exclusive of any rights, powers, privileges or remedies provided by law.
22 Joint and several liability
Where this guarantee is signed as guarantor by more than one person or is signed by one person for himself and on behalf of other persons (whether that person is signing on behalf of a partnership or otherwise ):
22.1 the expression the Guarantors shall include all such persons,
22.2 the liability of the Guarantors under this guarantee shall be the joint and several liability of such persons and any demand for payment made by you to any one or more of the persons so jointly and severally liable shall be deemed to be a demand made to all such persons, and
22.3 you are to be at liberty to release or discharge any one or more of such persons from liability under this guarantee or to compound with accept compositions from or make any other arrangements with any of such persons without in consequence releasing or discharging any other party to this guarantee or otherwise prejudicing or affecting your rights and remedies against any such other party.]
23 Joint signatories
If this guarantee is signed by or on behalf of more than one person and any one or more of those persons is not bound by the provisions of this guarantee (whether by reason of his or their lack of capacity, or improper execution of this guarantee or for any other reason whatever ), the remaining signatory or signatories shall continue to be bound by the provisions of this guarantee as if they had always been the only party or parties hereto.
(this clause is intended to prevent party A who undertakes obligations jointly and severally with party B arguing that he should not be bound by those obligations because party B proves not to be bound as a result of eg some defect in his execution of the document )]
24.1 Any demand under this guarantee shall be given by first class prepaid post, telex or fax addressed to the Guarantor or to the person to or upon whom the demand is to be made at the registered or principal office or last known place of abode of the Guarantor or of such person, as the case may be.
24.2 A demand shall be deemed to have been duly made:
24.2.1 if left at the registered or principal office or last known place of abode, on the day it was so left, or
24.2.2 if sent by first class prepaid post, 2 weekdays after the time when the demand was put in the post (and in proving delivery it shall be sufficient to prove that the same was properly addressed and put in the post ), or
24.2.3 if sent by telex or fax, at the time of dispatch.
In this guarantee, where the context permits, the singular includes the plural and vice versa, and references to persons include references to companies.
26 Governing law and jurisdiction
27 Property in the guarantee to belong to the bank
The paper on which this guarantee is written shall remain at all times the property of the Bank.
(this provision is included because, even after the guarantors liability under the guarantee has ceased, it is normally the practice of a bank to retain the discharged guarantee rather than hand it to the guarantor )
[AS (or ) IN] WITNESS etc.
(signature(s ) or common seal(s ) of the guarantor(s ) )
(an acknowledgement that the guarantor has received a copy of the guarantee should be obtained as a matter of practice: endorse on a copy )
[I (or ) WE] ACKNOWLEDGE receipt of a copy of the above guarantee.
(signature(s ) of the guarantor(s ) )