Guarantee checklist

Caption text

Term	Explanation	Comment
Consideration	Is there consideration for the guarantee
Permanence	Is the guarantee is unconditional, irrevocable and continuing
Unaffected	Is the guarantee unaffected by:
	interim payments
	obligor’s insolvency
	amendment or discharge of obligor’s obligations
	beneficiary’s waiver or forbearance to obligor
	other customary grounds for discharge of guarantees
Punctual performance	Guarantee is of the obligor’s “punctual performance”
Without prejudice	Guarantee is without prejudice to beneficiary’s rights against obligor
Independence	Guarantee is independent of any other credit support arrangement between beneficiary and obligor.
Indemnity	Against beneficiary’s costs of enforcement of guaranteed obligations
	Wrt the value of obligations which have become void or unenforceable against the obligor
Currency and payment	Payment must be in immediately available funds in the currency of the underlying obligations
No set-off or counterclaim	No set-off or counterclaim against moneys beneficiary owes the guarantor
Interest	interest from the date of demand until payment in full
Suspense account	beneficiary may place amounts beneficiary pays into a suspense account pending satisfaction in full
Demand process	Beneficiary may demand under the guarantee without taking steps against the obligor
No discharge if prejudice	Beneficiary does not have discharge the guarantee if that might prejudice its claim under insolvency laws.
Reinstatement	If beneficiary discharges guarantee following a payment that is then set aside, voided or found unenforceable, guarantor’s liability is reinstated.
Guarantor’s rights versus obligor	Until guaranteed obligations are fully paid guarantor can only proceed against the obligor with the beneficiary’s consent, and holds any sums it receives from the obligor to the beneficiary’s order.
Tax gross-up	If the guarantor is subject to some withholding that the obligor wouldn’t have been the guarantor has to gross up