Continuing guarantee

A continuing guarantee is one where the guarantor assumes liability for all the debtor’s past, present and future obligations to a creditor. Even where the amount owing has been paid in full, the guarantor can still be liable under the same facility if there is a subsequent indebtedness. This is useful for revolving credit facilities and other forms of indebtedness with a “now you see it, now you don’t” sort of a flavour to them.

This is to overcome a principle articulated in Devaynes v Noble that payments are presumed reduce debts in the order in which the debts are incurred.

Magic words^TM

No Continuing guarantee provision would be complete without the following magical incantation:

• The Guarantee is a continuing guarantee of the obligor's due and punctual performance of its present and future obligations .
• It will not be satisfied by any interim payment, settlement on account or satisfaction of any of the guaranteed obligations.

See also

• Guarantee
• Credit Support Document