Guarantees and indemnities carry serious legal and financial risk. By signing, you may become personally liable for another person’s or company’s debts.
Our guarantee and indemnity lawyers review, draft and negotiate documents in plain English so you understand the risks before committing. If enforcement has begun, we defend your position and work toward a practical resolution.
A guarantee is a promise to take responsibility for someone else’s debt or obligations if they cannot meet them.
An indemnity is a separate promise to compensate the lender directly for any loss, even if the original agreement is unenforceable.
Together, guarantees and indemnities are often included in the same document, giving the lender maximum protection. For the person signing, they create serious financial risk.
By signing, you may become personally liable for another person’s or company’s debts. If the borrower defaults, enforcement can extend to your home, savings or other assets.
Due to this exposure, guarantees and indemnities are among the most important finance documents to review carefully before signing.
A guarantee and indemnity lawyer can explain the terms in plain English, negotiate fairer provisions and make sure you fully understand the consequences.
Lenders ask for guarantees and indemnities to reduce their risk of loss.
They are common when a company or trust is borrowing money, because those entities may not have sufficient assets on their own.
By requiring directors, shareholders or family members to provide personal guarantees, the lender ensures there is someone else to pursue if the borrower defaults.
An indemnity goes even further by giving the lender direct rights against the guarantor, regardless of whether the borrower’s debt is enforceable.
In short, these documents shift risk away from the lender and onto the guarantor. This is why they are almost always drafted in the lender’s favour.
Before signing, it is essential to get independent legal advice to understand the scope of your liability and whether the terms can be negotiated or limited.
The risks of signing a guarantee and indemnity are significant and often underestimated.
Once signed, you may be personally liable for the borrower’s debts, which means your personal assets (such as your house, savings or business interests) could be at risk if the borrower defaults.
Liability may continue even if the loan is varied or extended, making it difficult to be released later.
Many documents also include broad indemnity clauses that cover costs, fees and other losses beyond the original debt.
Because guarantees and indemnities are usually drafted to favour the lender, they rarely include limits on your exposure. The key risk is signing without fully understanding what you are taking on.
Our guarantee and indemnity lawyers review the document, explain obligations clearly and help you minimise liability before you commit.
Disputing a guarantee or indemnity is possible, but not straightforward.
Courts generally uphold these documents because they are considered serious commitments. However, there may be grounds to challenge enforcement if you can show misrepresentation, duress, undue influence, unconscionable conduct or that proper disclosure was not given at the time of signing.
In some cases, the wording of the document may also be open to interpretation, particularly around the scope of the indemnity.
While disputes can be complex, seeking advice early gives you a better chance of negotiating with the lender or raising defences before enforcement proceeds too far.
If you are facing enforcement, our lawyers can assess your position, identify potential arguments and represent you in negotiations or litigation.
In most cases, yes.
Lenders commonly require borrowers, guarantors or directors to obtain independent legal advice before they will accept a signed guarantee and indemnity.
This protects the lender by showing that you understood the risks, but more importantly it protects you by ensuring those risks are explained in clear terms.
Independent advice usually involves a lawyer reviewing the document, identifying obligations and risks and certifying that you have been advised of their effect.
While some people treat this as a formality, it is often the only opportunity to fully understand what you are signing.
Our guarantee and indemnity lawyers provide this advice quickly and clearly, ensuring you know the consequences and can make an informed decision about whether to proceed.
Being released from a guarantee or indemnity can be difficult.
Lenders rarely agree to remove a guarantor once a document is signed, because it weakens their security. However, release may be possible in some circumstances, such as when the loan is repaid, refinanced or replaced with new security.
It may also be negotiated if the borrower’s financial position improves or if another guarantor takes your place.
In practice, many guarantors remain liable long after they expect to be. The key is to negotiate release provisions at the time of signing, not later.
If you are already bound, a lawyer can review the document and advise whether there are any grounds to be discharged or whether negotiation is possible.
Guarantees and indemnities expose you to risks that can affect your personal assets and financial future. Legal advice ensures you understand the obligations, avoid unfair terms and protect yourself from unnecessary liability.
Guarantees and indemnities are dense and technical. We explain your obligations in plain English so you know exactly what you’re agreeing to and what assets may be at risk.
These documents favour the lender. We review and negotiate terms, narrowing unfair provisions and reducing exposure so your personal and business assets are better protected.
Many guarantees contain hidden traps like “all monies” clauses or ongoing liability. We identify these risks and give you strategies to manage or limit them.
Signing a guarantee is serious. With clear advice, you can make an informed decision about whether to sign, negotiate, or walk away.
We’re here to protect your financial security
Whether you are asked to sign a guarantee for a business loan, a lease or as a director of a company, our guarantee and indemnity lawyers ensure you understand the risks and protect your assets before you commit.
When personal liability is on the line, you need advice that is precise, practical, and timely.
Guarantees and indemnities are technical and high-risk. We specialise in reviewing and explaining them in plain English, giving you clarity and confidence before signing.
Our experience across lending, business, and personal finance means we know how these documents work in practice. We anticipate lender tactics and protect you from common pitfalls.
We act for you, not the bank. Our role is to protect your interests, provide unbiased advice, and make sure you are not exposed to unfair terms.
Our focus is on limiting your personal exposure and ensuring you only commit where terms are fair, manageable, and aligned with your financial position.
