Guarantee checklist

Caption text

Issue	Narrative	Comment
Consideration	Is there consideration for the guarantee
Permanence	Is it unconditional, irrevocable and continuing
Unaffected	Is it 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	Does it guarantee the obligor’s “punctual performance”
Without prejudice	Is it without prejudice to beneficiary’s rights against obligor
Independence	Is it independent of any other credit support arrangement between beneficiary and obligor.
Indemnity	Is there an indemnity against beneficiary’s costs of enforcement of guaranteed obligations
	Is there an indemnity wrt the value of obligations which are void/unenforceable against the obligor
Currency and payment	Must payment must be in immediately available funds in the currency of the underlying obligations
No set-off or counterclaim	Is set-off or counterclaim against moneys beneficiary owes the guarantor excluded
Interest	Must guarantor pay interest from the date of demand until payment in full
Suspense account	May beneficiary place amounts beneficiary into a suspense account pending satisfaction in full
Demand process	May beneficiary demand without first taking steps vs the obligor
No discharge if prejudice	May beneficiary decline to discharge the guarantee if itmight prejudice its claim under insolvency laws
Reinstatement	If beneficiary discharges guarantee is guarantor’s liability reinstated should payments be set aside
Guarantor’s rights versus obligor	Must Guarantor obtain beneficiary’s consent before taking action against obligor until guaranteed obligations are fully paid
	Must guarantor hold sums it receives from the obligor in those circumstances to beneficiary’s order
Tax gross-up	Must guarantor gross up if subject to withholding on guarantee payments