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Guaranty Agreement Template for Switzerland

A Swiss law Guaranty Agreement is a legally binding document where one party (the Guarantor) commits to secure the obligations of another party (the Principal Debtor) to a third party (the Beneficiary/Creditor). Governed by the Swiss Code of Obligations, particularly Articles 492-512, this agreement must meet specific formal requirements including written form and explicit statement of the maximum liability amount. The document details the scope of the guarantee, payment obligations, enforcement mechanisms, and termination conditions while ensuring compliance with Swiss banking and financial regulations where applicable.

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What is a Guaranty Agreement?

The Guaranty Agreement serves as a critical risk mitigation tool in various commercial and financial transactions under Swiss law. This document type is commonly utilized when additional security is required for financial obligations, such as loans, credit facilities, or commercial contracts. The agreement must comply with the strict requirements of the Swiss Code of Obligations, particularly regarding form and content. A Guaranty Agreement typically includes detailed provisions about the scope of the guarantee, the maximum amount guaranteed, conditions for enforcement, and the rights and obligations of all parties involved. It's particularly relevant in banking transactions, corporate finance, and commercial dealings where one party seeks additional security for the performance of obligations by another party.

What sections should be included in a Guaranty Agreement?

1. Parties: Identification of the Guarantor, the Beneficiary (creditor), and reference to the Principal Debtor

2. Background: Context of the guarantee, including reference to the underlying obligation or principal debt being guaranteed

3. Definitions: Key terms used throughout the agreement, including 'Guaranteed Obligations', 'Principal Debt', 'Security', etc.

4. Guarantee: Core guarantee provisions, including scope, nature (joint and several vs. simple guarantee), and maximum amount

5. Guarantor's Representations and Warranties: Confirmations regarding capacity, authority, and financial condition of the Guarantor

6. Payment Obligations: Terms of payment, currency, timing, and method of payment under the guarantee

7. Duration and Termination: Term of the guarantee and conditions for termination or release

8. Independence of Guarantee: Confirmation that the guarantee is independent from the underlying obligation

9. Enforcement: Process and conditions for enforcing the guarantee

10. Notices: Communication requirements and contact details

11. Governing Law and Jurisdiction: Confirmation of Swiss law application and jurisdiction for disputes

What sections are optional to include in a Guaranty Agreement?

1. Security: Include when additional security is provided for the guarantee obligations

2. Financial Covenants: Include when the Guarantor must maintain specific financial metrics

3. Information Undertakings: Include when regular financial or other reporting is required from the Guarantor

4. Tax Gross-up: Include when tax implications need to be addressed

5. Currency Indemnity: Include for cross-border transactions involving multiple currencies

6. Assignment and Transfer: Include when transfer rights need to be specifically addressed

7. Multiple Guarantors: Include when there is more than one guarantor

8. Subordination: Include when the guarantee needs to be subordinated to other obligations

What schedules should be included in a Guaranty Agreement?

1. Form of Demand: Template for making a demand under the guarantee

2. Underlying Obligation Details: Details of the principal debt or obligation being guaranteed

3. Security Documents: If applicable, list and copies of security documents

4. Corporate Authorizations: Copies of relevant corporate approvals and authorizations

5. Financial Statements: If applicable, latest financial statements of the Guarantor

6. Calculation of Guaranteed Amount: If the guaranteed amount is variable or needs calculation

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents

Jurisdiction

Switzerland

Publisher

Ƶ

Document Type

Guarantee Agreement

Sector

Banking

Cost

Free to use

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