Free Personal Guarantee Template
A personal guarantee is a legally binding promise under UK law by an individual to repay a debt or meet an obligation if the primary debtor (usually a British company) fails to do so. It is commonly required by lenders, landlords, and suppliers when dealing with limited companies in England and Wales.
"Principal Debtor" means Hartwell Construction Ltd of Unit 7, Riverside Business Park, Leeds LS9 8AQ (in relation to whom the Guarantor is the Sole director and majority shareholder).
"Guaranteed Obligations" means All present and future monies, obligations and liabilities owed by the Principal Debtor to the Creditor under a loan facility of up to £250,000 and a related asset-finance facility of up to £75,000, dated 1 March 2026 (reference: NFP-LOAN-2026-0445).
"Demand" means a written demand served by the Creditor on the Guarantor in accordance with clause 3.
"CRTPA 1999" means the Contracts (Rights of Third Parties) Act 1999.
The singular includes the plural, headings are for convenience only, and references to statutes include statutory modifications and re-enactments.
The aggregate liability of the Guarantor under this Guarantee shall not exceed £250,000, which the Guarantor acknowledges is a fair and reasonable limit having regard to the test of reasonableness under sections 3 and 11 of the Unfair Contract Terms Act 1977.
This Guarantee is a continuing security which shall remain in force until the Guaranteed Obligations have been paid, performed and discharged in full, notwithstanding any intermediate payment or settlement of account.
The Creditor shall not be required to take any steps against the Principal Debtor or enforce any other security before proceeding against the Guarantor under this Guarantee, the Guarantor being liable as a principal obligor and not merely as a surety.
(a) any failure of the Guaranteed Obligations to be recoverable from the Principal Debtor for any reason, including any legal limitation, disability, incapacity, defect or lack of authority of the Principal Debtor;
(b) the Guaranteed Obligations being, or becoming, void, voidable, unenforceable, illegal or invalid; and
(c) the insolvency, liquidation, administration, receivership, winding-up or dissolution of the Principal Debtor.
The amount recoverable under this indemnity shall be the amount which the Creditor would otherwise have been entitled to recover from the Principal Debtor.
(a) any time, waiver, indulgence or consent granted to, or compromise with, the Principal Debtor or any other person;
(b) any release, variation, amendment, novation or supplement to the Guaranteed Obligations;
(c) the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect, take up or enforce, any rights or remedies against the Principal Debtor or any security;
(d) any legal limitation, disability, incapacity or lack of authority of the Principal Debtor;
(e) the insolvency, liquidation, bankruptcy, administration or dissolution of the Principal Debtor; or
(f) any unenforceability, illegality or invalidity of any obligation of the Principal Debtor.
The Guarantor confirms that the Guarantor has obtained independent legal advice from Rachel Stevens of Ward and Partners LLP, a solicitor practising independently of the Creditor and the Principal Debtor. The solicitor has explained the nature, effect and legal consequences of this Guarantee and the Guarantor has entered into it freely and without undue influence.
What Is a Personal Guarantee?
A personal guarantee is a commitment by an individual — typically a company director or shareholder — to personally repay a debt or fulfil an obligation if the company cannot. It removes the protection of limited liability for that specific obligation, putting the guarantor's personal assets at risk.
Lenders, commercial landlords, and trade suppliers in the UK frequently require personal guarantees when extending credit to limited companies, particularly small or newly formed businesses. The guarantee gives the creditor an additional source of recovery if the company defaults or becomes insolvent.
UK personal guarantees can be limited (capped at a specific amount) or unlimited (covering the entire debt plus interest and costs). They may also be continuing guarantees, covering all current and future liabilities between the British creditor and the debtor.
What's Covered in This Template
Our personal guarantee template covers the key terms creditors and guarantors need:
Creditor Details
Full name and address of the party the guarantee is given to.
Principal Debtor
Details of the company or person whose obligation is being guaranteed.
Guarantor Details
Full name, address, and capacity of the individual giving the guarantee.
Guaranteed Obligations
A clear description of which debts or obligations are covered.
Limit of Liability
Whether the guarantee is limited to a specific amount or is unlimited.
Duration
How long the guarantee lasts and the conditions for its release.
Demand Provisions
How and when the creditor can call on the guarantee.
Interest and Costs
Whether the guarantor is liable for interest and enforcement costs.
Waiver of Defences
Provisions preventing the guarantor from raising certain defences that might otherwise defeat the claim.
Signatures
Dated signatures of the guarantor and creditor, with witness provisions.
How to Create a Personal Guarantee
Follow these steps to create a clear and enforceable personal guarantee:
- 1
Identify the Obligation
Define exactly which debt, loan, lease, or obligation the guarantee covers. Be specific about the creditor, the debtor, and the underlying agreement.
- 2
Set the Limit
Decide whether the guarantee will be capped at a specific amount or cover the full extent of the debtor's liability. Guarantors should always try to negotiate a cap.
- 3
Define the Duration
Specify how long the guarantee lasts — for the term of a lease, until a loan is repaid, or for a fixed period.
- 4
Include Demand Provisions
State the circumstances in which the creditor can demand payment from the guarantor and the process for making a demand.
- 5
Sign as a Deed
Personal guarantees are typically executed as deeds, requiring the guarantor's signature, a witness, and delivery. Execution as a deed extends the limitation period to twelve years and removes the need for separate consideration.
Legal Considerations
Personal guarantees in England and Wales are governed by contract law and equity, with specific rules about enforceability and defences.
This template is for informational purposes only and does not constitute legal advice. Consult a qualified solicitor for advice specific to your situation.
Reviewed for England & Wales law
Execution as a Deed
Most UK personal guarantees are executed as deeds under the Law of Property (Miscellaneous Provisions) Act 1989. This means they must be signed, witnessed, and "delivered" under English law. Execution as a deed is important because British guarantees often lack separate consideration (the benefit flows to the debtor, not the guarantor).
Statute of Frauds
Under section 4 of the Statute of Frauds 1677, a guarantee must be evidenced in writing and signed by the guarantor (or their agent) to be enforceable in the United Kingdom. An oral guarantee is not enforceable under English law.
Undue Influence
A UK personal guarantee can be set aside if the guarantor signed under undue influence — for example, pressure from a spouse or business partner. British creditors should ensure the guarantor received independent legal advice, particularly where the guarantor is not a direct beneficiary of the underlying transaction.
Insolvency
If the principal British debtor company enters administration, liquidation, or CVA under the UK Insolvency Act 1986, the creditor can still pursue the personal guarantor. This is the entire purpose of the UK guarantee — it provides recovery when the company cannot pay.
Frequently Asked Questions
Create a Clear Personal Guarantee
Use our free template to draft a personal guarantee with proper legal structure. Protect the interests of both creditor and guarantor.
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