Guarantee: individual guarantor independent legal advice letter
Letter of advice from a solicitor to a lender confirming independent legal advice given to individual guarantor for a corporate guarantee under a loan agreement
A lender may require that a corporate borrower’s obligations are guaranteed by another person, a guarantor. The guarantor could be:
- another company, including the borrower’s parent company, a subsidiary of the borrower or subsidiary of the borrower’s parent company
- an individual, including one of the company’s directors or shareholders
Does an individual require independent legal advice before giving a personal guarantee?
To avoid the possibility of a guarantee given by an individual being potentially set aside by reason of the guarantee having been given under duress or having been procured by undue influence, a lender may require the individual guarantor to seek independent legal advice before entering into the guarantee. This is particularly the case if the individual guarantor is the husband or wife of a shareholder of the corporate borrower.
About this document:
This document is the form of letter of advice to be given by a solicitor confirming that it has given independent legal advice to an individual guarantor who is proposing to enter into a guarantee of a corporate borrower’s obligations under a loan agreement. The letter is addressed to the lender.
- letter from legal adviser to lender
- confirmation of meeting between individual and legal adviser at which the advice was given
- confirmation of the nature of the advice given and that the individual understood the nature and extent of the guarantee obligations
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