guarantee & indemnity agreement

8/2/2019 Guarantee & Indemnity Agreement

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LawSoft elawpublishing.com.au 1 Copyright Law Institute of Victoria

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This document has been prepared by the Law Institute of Victoria.

This document may require to be added to or amended to ensure its suitability for a particular transaction.

For that reason you should consult a solicitor. Published by the Law Institute of Victoria. 2003

Law Institute of Victoria

Guarantee & Indemnity Agreement

Overview

Details of this agreement

Signatures of parties

Your acknowledgment and representations

1. Your acknowledgments before signingthis agreement

2. Your representations

The guarantee

3. What do you guarantee?4. What is the guaranteed money?

The indemnity

5. What is the indemnity?

Your obligations

6. Your obligations are separate andcontinuing

7. If you are a trustee

8. Even if not everyone signs

9. You waive your rights as guarantor

Paying money under the guarantee andindemnity

10. When and what amounts you must pay

11. How you must pay

12. How we may use your money

13. We may credit money to a suspenseaccount

14. Our certificate

Discharging this agreement

15. You my request a discharge

16. No right to make claims

Our rights

17. Giving of our consent or approval

18. Waivers must be in writing

19. We may assign our rights etc

20. We may enforce at any time

Giving a valid notice21. How to give a notice and when it is given

Miscellaneous provisions

22. Effect of law on our rights

23. Effect of this agreement and otheragreements

24. This is the entire agreement

25. If a condition is prohibited orunenforceable

26. Variations must be in writing

27. Credit legislation is not excluded28. Governing law is Victorian

Defining and interpreting this agreement

29. Defined words

30. Interpreting this agreement

Attachments

1 Certificate of independent legal advice

2 Information Statement Things youshould know about guarantees


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Law Institute of Victoria Guarantee & Indemnity Agreement

LawSoft elawpublishing.com.au 2


Guarantee & Indemnity Agreement

Overview

Summary of this agreement This is a guarantee and indemnity agreementbetween you and us.

You have asked us to provide credit to theborrower under a credit contract. We have agreedto provide this credit if you give us the guaranteeand indemnity set out in this agreement. You haveagreed to do this.

We may be asked to provide credit to theborrower in the future under a future creditcontract. If we agree to provide this credit, andyou accept in writing the conditions of the futurecredit contract, then this guarantee and indemnity

also covers that future credit contract.

In this agreement, you guarantee that theborrower will pay all money owing under the creditcontract or a future credit contract. You alsoindemnify us in certain circumstances against ourloss if the guaranteed money owing is not paid orcannot be recovered.

We may call on you to pay us the guaranteedmoney:

- if the borrower does not pay on time or at all;and

- even if we have not asked the borrower to pay.

We may also call on you to pay our reasonableexpenses of enforcing the guarantee or theindemnity.

Please note: If the borrower is under 18 yearsof age at the time the borrower incurs aliability guaranteed by you, you may not beable to claim or enforce an indemnity againstthe borrower.

Words used in this agreement we, us and our means each person namedas lender (see page 3).

you means each person named as guarantor(see page 3). A reference to you includes all or

any of you. If there is more than one person, eachperson is jointly and severally liable under thisagreement. This means we may require one, all,or any combination of you to pay any unpaidamount in full.

Some words and expressions used in thisagreement have special meanings. They areexplained in clauses 29 and 30.


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Details of this agreement

Date of agreement

Lender Name

Address

Guarantor 1 Name

Address

Guarantor 2 Name

Address

Borrower 1 Name

Address

Borrower 2 Name

Address

Limit on guaranteedmoney?

Yes The guaranteed money is limited to the amount of

$

.................

.................

(Initials of eachguarantor)

No The guaranteed money is not limited to a specificdollar amount, but is limited by clause 4.3.


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IMPORTANT BEFORE YOU SIGN THINGS YOU MUST KNOW

READ THIS GUARANTEE DOCUMENT ANDTHE CREDIT CONTRACT DOCUMENT

Understand that, by signing this guarantee,you may become personally responsibleinstead of, or as wells as, the debtor to paythe amounts which the debtor owes and thereasonable expenses of the credit provider in

enforcing the guarantee.You should also read the informationstatement: THINGS YOU SHOULD KNOWABOUT GUARANTEES

If the debtor does not pay you must pay. Thiscould mean you lose everything you ownincluding your home.

You should obtain independent legal advice. You may be able to withdraw from thisguarantee or limit your liability. Ask your legaladviser about this before you sign thisguarantee.

You should also consider obtainingindependent financial advice.

You should make your own inquiries about

the credit worthiness, financial position andhonesty of the debtor.

You are not bound by a change to the credit

contract, or by a new credit contract, thatincreases your liabilities under the guaranteeunless you have agreed in writing and havebeen given written particulars of the changeor a copy of the new credit contractdocument.

Signature of parties

Signed by guarantor 1

.......................................................................Signature of guarantor 1

.......................................................................Name of guarantor 1 (please print)

in the presence of:

......................................................................Signature of witness

......................................................................Name of witness (please print)

Signed by guarantor 2

.......................................................................

Signature of guarantor 2

.......................................................................Name of guarantor 2 (please print)

in the presence of:

......................................................................

Signature of witness


Signed by lender

.......................................................................Signature of lender

.......................................................................Name of lender (please print)

in the presence of:

......................................................................Signature of witness



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Your acknowledgments and representations

1. Your acknowledgmentsbefore signing this

agreement

1.1 Before signing this agreement you acknowledge thatyou did the following:

(a) asked us to provide credit to the borrower under acredit contract;

(b) were given a copy of, and have read, both thecredit contract that we and the borrower proposeto enter into, and the attached informationstatement called Things you should know aboutguarantees;

(c) have read this agreement;

(d) were advised by us to, and had the opportunity to,get advice from an independent lawyer and anindependent financial adviser about this

agreement including its obligations, effect, legalconsequences and financial consequences;

(e) consulted and received advice about themeaning, consequences of, and obligationscreated by this agreement from a lawyer who isindependent of us and the borrower, and obtaineda certificate from that lawyer in the form set out inattachment 1;

(f) read and understood this agreement including itsobligations, effect, legal consequences andfinancial consequences; and

(g) agreed that it is your responsibility to fullyinvestigate the financial position, credit worthinessand honesty of each of the borrower and anyother guarantor.

2. Your representations 2.1 You represent to us that all information provided to us byyou or on your behalf is true and correct and notmisleading. You have not withheld from us anydocument or information that may substantially affectour decision to extend credit to the borrower.

2.2 You represent to us that you have not taken any securityfrom the borrower concerning this agreement or the

guaranteed money.

The guarantee

3. What do you guarantee? 3.1 You guarantee unconditionally that the guaranteedmoney will be paid to us when it is due and payable.

4. What is the guaranteedmoney?

4.1 The guaranteed money is all the money that theborrower owes us now or in the future under a creditcontract.

4.2 The guaranteed money also includes all the money thatthe borrower is liable for under a future credit contract if:


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a) we first give you a copy of the proposed futurecredit contract; and

(b) you then agree in writing that this guarantee andindemnity also covers that future credit contract.

4.3 Your maximum liability under this agreement is thelesser amount of:

(a) the borrowers liabilities under each creditcontract plus our reasonable enforcementexpenses reasonably incurred in enforcing theagreement; and

(b) the amount (if any) set out next to the Yes boxin the section headed Limit on guaranteedmoney on page 3.

5. What is the indemnity 5.1 You must pay us as an indemnity all amounts we cannotrecover from the borrower if a credit contract is notenforceable solely because of:

(a) the borrowers death, insolvency or incapacity;

(b) the borrowers act or omission; or

(c) other circumstances affecting the borrower.

Your obligations

6. Your obligations areseparate and continuing

6.1 The guarantee is a continuing guarantee and theindemnity is a continuing indemnity. This means thatyour obligations and promises continue until thisagreement is discharged or ends.

6.2 Your obligations under the guarantee are separate andindependent from your obligations under the indemnity.

6.3 You agree that we may enforce our rights under theindemnity against you as a principal debtor even if wecannot recover the guaranteed money under theguarantee.

7. If you are a trustee 7.1 This clause applies if you give the guarantee andindemnity as a trustee of a trust (whether or not weknow about the trust).

7.2 You enter into and are liable under the guarantee andindemnity both as trustee of the trust to the extent of thetrust assets and personally.

7.3 We may:

(a) directly access the trust assets for the purpose ofpaying the guaranteed money; and

(b) require you to, and you then must, exercise allrights you have against the trust assets and thetrust beneficiaries for the purpose of paying theguaranteed money.

7.4 You represent to us that all the following are true andcorrect and not misleading:

(a) you have the right to be indemnified out of thetrust assets (and before any trust beneficiary) forall liabilities you incur under the guarantee andindemnity and the trust property is sufficient tosatisfy this right of indemnity;


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(b) you have the power under the trust to enter intothe guarantee and indemnity and perform yourobligations under the guarantee and indemnity.You are not in breach of the trust by entering intothe guarantee and indemnity;

(c) you have entered into the guarantee andindemnity for a proper purpose of the trust;

(d) your performance of your obligations under theguarantee and indemnity is for the trustscommercial benefit and interests, and is for thebenefit of the trust beneficiaries;

(e) you are not in default under or in breach of thetrust;

(f) you are the only trustee of the trust, and no stephas been taken to remove you or to appointanother trustee;

(g) the trust is a valid trust and no action has beentaken to terminate the trust; and

(h) you have given us all the terms of the trust,including a complete, up-to-date copy of any trustdeed.

7.5 At any time after you have signed the guarantee andindemnity you must tell us if, on the facts at that time,you become aware that a representation is no longertrue or correct or is misleading.

7.6 If another person is appointed to replace you as trusteeof the trust, you must make sure that the person signsall documents and does all other things we required so

that the guarantee and indemnity is binding on thatperson.

8. Even if not everyone signs 8.1 When you sign this agreement you are bound by it,even if:

(a) another person named or described as aguarantor does not sign it, is not bound by it orhas no power to sign it; or

(b) another person who intended to give a securityfor part or all of the guaranteed money:

does not sign, is not bound by, or has nopower to sign the security; or

is no longer liable under, or is dischargedfrom liability under, the security.

9. You waive your rights asguarantor

9.1 As far as permitted by law you waive all rights that youmay have as a guarantor under the law (including suretylaw) and that may:

(a) entitle you to be partly or fully released ordischarged from your obligations under thisagreement; or

(b) restrict or prevent us from enforcing our rightsand remedies under this agreement.


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9.2 For example, you waive a right that may arise in one ormore of these circumstances:

(a) if the guaranteed money cannot be recoveredfrom the borrower, another guarantor or a securityprovider;

(b) if an agreement or security given to us concerning

the guaranteed money is defective,unenforceable, or ranks after another agreement,security or obligation;

(c) if, without first getting your consent, we doanything concerning the guaranteed money, acredit contract, or a security or indemnity for theguaranteed money. For example, if we

grant time or other indulgence to, or waivean obligation of, the borrower, anotherguarantor or a security provider;

compromise, compound or make anarrangement concerning an obligationowed to us by the borrower, anotherguarantor or a security provider;

release the borrower, another guarantor ora security provider from an obligation undera credit contract, the guarantee andindemnity or a security; or

obtain a court judgment against theborrower, another guarantor or a securityprovider.

(d) if, without first telling you or getting your consent,we vary or allow a variation to a credit contract.

But we must tell you and get your prior writtenconsent if a variation increases or allows for anincrease in liabilities under that credit contract; or

(e) if the borrower, another guarantor or anotherperson dies, becomes mentally incapable orbecomes insolvent.

Paying money under the guarantee or indemnity

10. When and what amountsyou must pay

10.1 You must immediately pay us the guaranteed money(see clause 4) if the guaranteed money is not paid whenit is due and payable.

10.2 You must immediately pay us all money you are liable topay under the indemnity (see clause 5) when we giveyou a written demand for payment under the indemnity.

10.3 You must also immediately pay us all reasonableexpenses we reasonably incur in enforcing thisagreement if we give you a written demand for paymentsetting out those enforcement expenses.

11. How you must pay 11.1 You must pay in cash or by bank cheque to the accountnominated by us. We may change the method ofpayment or the nominated account by giving you writtennotice.

11.2 You must pay all amounts in full and must not make aset-off, a counterclaim, a deduction, or attach anycondition to the payment unless required or permitted bylegislation.


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12. How we may use yourmoney

12.1 At any time we may use any money that is now or in thefuture credited to your account with us to reduce orsatisfy amounts you owe us under this agreement.

12.2 We may also set off any other debt or monetary liabilitythat we owe you against amounts which are due andpayable by you under this agreement.

13. We may credit money to asuspense account

13.1 We may credit any money that we receive from you oron your behalf to a suspense account. We may applythe money in the suspense account to reduce yourliability under this agreement when we reasonablydetermine.

14. Our certificate 14.1 A certificate signed by us or our authorised agent oremployee concerning any thing (for example; theamount of the guaranteed money, or the date when ademand or notice was sent) is sufficient evidence of theaccuracy of the thing at the date of the certificate. Thisis so unless the certificate is proved incorrect.

Discharging this agreement15. You may request a

discharge15.1 At your written request, we must discharge this

agreement if:

(a) the guaranteed money (which includes any futureor contingent part of the guaranteed money) hasbeen paid in full; and

(b) all obligations under this agreement and eachsecurity or other agreement concerning theguaranteed money have been performed.

15.2 But we are not obliged to discharge this agreement if, at

the time when its requirements are satisfied, we believethat:

(a) you owe further money (contingently orotherwise) to us under this agreement; or

(b) you will owe further money to us under thisagreement within a reasonable time from the dateof your request to discharge this agreement.

15.3 If a transaction in our favour (for example: a payment tous) concerning the guaranteed money is wholly or partlyavoided, set aside, refunded or repaid, then, even if thisagreement has been discharged or ended, you agree to

all the following:(a) your liabilities and our rights under this agreement

are the same as if the transaction had not beenavoided, set aside, refunded or repaid; and

(b) we may exercise all our rights under thisagreement as if the agreement had never beendischarged.

16. No right to make claims 16.1 Until this agreement is discharged, you may not:

(a) claim the benefit of, or require us to transfer toyou, the security or rights that we haveconcerning the guaranteed money; or

(b) claim an amount from another guarantor or in theinsolvency of another guarantor concerning anamount paid or payable by you under thisagreement.


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Our rights

17. Giving of our consent orapproval

17.1 When you are required to obtain our consent orapproval, we may withhold or give it as we think fit, andwith or without conditions. You must comply with allconditions or our consent or approval.

18. Waivers must be in writing 18.1 If we omit to or do not exercise a right under thisagreement, then we have not waived or given up theright. We may exercise it at any later time.

18.2 We only waive or give up our right if the waiver orconsent in writing and signed by us or our authorisedagent or employee. The waiver or consent is onlyeffective for the circumstance and purpose set out inwriting.

19. We may assign our rightsetc

19.1 We may transfer or assign or otherwise deal with any ofour rights, benefits or obligations under the guaranteeand indemnity. We do not need your consent to do this.

We may also disclose any information or documentsconcerning this agreement or you to any person towhom we assign or may assign our rights under thisagreement.

19.2 If the guarantee and indemnity has been assigned ortransferred to a person, a reference to we, us or ourincludes that person. That person may exercise ourrights under the guarantee and indemnity.

20. We may enforce at any time 20.1 Before or after we enforce this agreement we are notrequired (except if required by legislation):

(a) to enforce any of our rights against the borrower

or another person, including under a security thatyou, the borrower or another person has given us;or

(b) to appropriate or recover any money or asset foryou to another person that we hold or are entitledto receive at any time (for example; money in anaccount a person has with us).

Giving a valid notice

21. How to give a notice andwhen it is given

21.1 Our notice to you is valid if signed by us or on our behalfby our agent or solicitor.

21.2 We may give a demand or notice to you in any way thelaw allows, including the following ways:

(a) giving it personally to you;

(b) leaving it at your last known address;

(c) posting it by ordinary mail in a prepaid envelopeto your last known address; or

(d) transmitting it by facsimile to your last knownfacsimile number.

21.3 You must give us notice by:

(a) giving it personally to us or one of our employees;

(b) posting it by ordinary mail in a prepaid envelopeto our office at our address (see page 3); or

(c) any other means permitted by law.


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21.4 A notice is taken to be given

(a) if given personally, when it is received;

(b) if left at our address, when left;

(c) if posted, when it would be delivered in theordinary course of post but no later than 5business days after it is posted; or

(d) if transmitted by facsimile, when the machinesending the facsimile reports (for example; by aconfirmation of transmission printout) that thenotice was sent to the addressees facsimilenumber.

Miscellaneous provisions

22. Effect of law on our rights 22.1 If a law or lawful requirement of a government bodymakes illegal, void or unenforceable:

(a) a right given to us in this agreement; or

(b) a provision of the agreement;

then the right of provision must be interpreted as limitedor omitted to the extent that it has the effect. This doesnot invalidate any other right or provision.

23. Effect of this agreementand other agreements

23.1 This agreement does not merge with, extinguish,postpone, or lessen:

(a) another security in our favour;

(b) an indemnity in our favour in any security oranother agreement concerning the guaranteedmoney; or

(c) a right we may have against you or other person.

23.2 Any other security we hold does not limit or lessen anyof our rights under this agreement.

24. This is the entireagreement

24.1 This agreement sets out all of the terms between youand us. This agreement supersedes any otherrepresentation, promise or statement made by us or byany of our employees or agents.

25. If a condition is prohibitedor unenforceable

25.1 A provision in this agreement that is prohibited by law orunenforceable in whole or in part is only ineffective tothe extent it is prohibited or unenforceable. It does notinvalidate any other provision.

26. Variations must be inwriting

26.1 A variation of this agreement must be in writing andsigned by all of the parties.

27. Credit legislation is notexcluded

27.1 This agreement does not:

(a) exclude, modify or restrict any rights or duty givento, or imposed on, us or you under creditlegislation;

(b) require you to perform an obligation that isprohibited by credit legislation; or

(c) give us any right which is prohibited by creditlegislation.

27.2 But if a term has this effect, then the term must bevaried to the extent necessary or, if necessary, limitedor omitted to the extent it has that effect.


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28. Governing law is Victorian 28.1 The guarantee and indemnity is governed by and mustby interpreted according to Victorian law.

Defining and interpreting this agreement

29. Defined words 29.1 In this agreement, these words and expressions have

the following meaning:(a) borrower means the person or persons named

as the borrower (set out on page 3);

(b) business day means a day when banks areopen for business in Melbourne, Victoria;

(c) credit contract means any agreement (whetherentered into now or in the future) in which weprovide the borrower with credit (as defined in theConsumer Credit Code);

(d) credit legislation means

consumer credit legislation enacted toimplement, or contemplated by, the UniformCredit Laws Agreement 1993; and

other legislation that we notify to you isincluded in this definition;

(e) government body means a government, semi-government, administrative, judicial or statutorybody or person able to exercise legislative oradministrative powers;

(f) law means common law, principles of equity andlegislation;

(g) legislation includes a law made by parliament,proclamation, ordinance, regulation, or a by lawmade under legislation;

(h) guaranteed money has the meaning in clause 4and does not exceed any amount to which yourliability is limited;

(i) right means a right, power, authority, discretion,or remedy given to us by this agreement or underlaw; and

(j) security means an interest in or power overassets given to secure the payment of money orthe performance of an obligation. It includes a

charge, mortgage, lien, encumbrance, pledge,guarantee, indemnity or guarantee and indemnity.

30. Interpreting this agreement 30.1 In interpreting this agreement:

(a) headings are only for convenience and do notaffect interpretation;

(b) a word or expression indicating the singularincludes the plural, and the other way around;

(c) examples are descriptive only and are notexhaustive;

(d) reference to any thing includes a part of the thing;

(e) reference to a party includes the partys personalrepresentative, successor, transferee, orpermitted assign;


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(f) if the day on or by which any thing must be doneis not a business day, then the thing must bedone on or by the next business day;

(g) a rule of construction does not disadvantage aparty just because that party prepared theagreement;

(h) a promise or agreement by two or more personsbinds them each individually and together;

(i) reference to an agreement, document orinstrument includes any legally enforceablearrangement or understanding (whether or not inwriting). It also includes an amendment,supplement to, replacement of, or novation ofthem.

(j) reference to a liability or obligation includes apresent, future, actual prospective or contingentliability or obligation. It may be incurred alone orwith any other person. The amount may or may

not be able to be determined;(k) reference to a person includes a body corporate,

partnership, unincorporated joint venture, and agovernment body; and

(l) reference to legislation includes all legislationamending, consolidating or replacing it.


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Attachment 1

Certificate of independent legal advice

[see clause 1(e)]

Part A: To the lenderTo: Lenders name:

Address:

(lender)

This certificate is provided by

Solicitors name:

Firm:

Address:

1. I am a solicitor holding a current practising certificate under the Legal Profession Practice Act 1958. Iam not acting for you or for the borrower in this transaction.

2. I have been asked to interview the guarantor/s:

(the guarantor).

3. I have been provided with the following documents:

guarantee and indemnity agreement between:

andand the lender;

Part B: Explanations given by the certifying solicitor

4. I certify that in the absence of the borrower and before the guarantor signed the documents, Iexplained to the guarantor:

the general nature and effects of the documents required to be signed by the guarantor

that if the borrower defaults in payment or in other obligations to you the guarantor would be liable

to make good the default which could involve all amounts owed by the borrower to you and thesubstantial arrears of interest

that the giving of a guarantee involves considerable risk, including the risk of losing any security,property and other assets, and requires very careful thought.

Part C: Excluded explanations

5. I informed the guarantor in very clear terms that I was not expressing any opinion nor advising on:

the viability of the transaction which the borrower was undertaking

the borrowers ability to make the required payments to you

the clients (guarantors) ability to make payment to you.

6. I further informed the guarantor that if in any doubt on those aspects the guarantor should obtainindependent financial advice before signing the documents.


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Law Institute of Victoria Attachment 1


Part D: Statements by the persons signing the documents

7. Following the above explanations, the guarantor stated to me:

that the guarantor understood the general nature and effect of the documents and the obligationsand risks involved in signing those documents. It appeared to me that the guarantor did have suchunderstanding.

that the guarantor was signing these documents freely, voluntarily and without pressure from theborrower or any other person.

Part E: Identification of person signing the documents

8. The following evidence of identification was produced to me by the guarantor, viz:

[Optional] Part F: Translation/Interpretation

9. An independent interpreter,was present at this interview with the guarantor and interpreted the statements made by all personspresent.

A certificate of the interpreter is held by me.

Solicitors certificate

I certify the above information. The borrower was not present during my interview with the guarantor.

Signed: ..........................................................

Dated: ..........................................................

Clients certificate

I certify that:

I have been handed a copy of this certificate.

I have read this certificate.

I am the client named.

The above information is true.

Signed: ..................................................... Signed: ......................................................

Dated: ..................................................... Dated: ......................................................


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Form of acknowledgment by a debtor or suretyto the certifying solicitor

The guarantor (me)

1. This acknowledgment is provided by me:

Name:

Address:

Occupation:

Name:

Address:

Occupation:

The certifying solicitor

2. To the solicitor

Name:

Firm:

Address:

My acknowledgments

3. I acknowledge that

the solicitor has signed a certificate at my request

my name and address is correctly recorded above and on the certificate given by the solicitor and Ihave provided proof of my identity in the manner recorded in the certificate

I did attend the office of the certifying solicitor on the date recorded in the certificate for thepurposes of receiving legal advice on the nature and effect of the documents referred to in thecertificate

I have received the explanations referred to and have stated to the solicitor that I understand thoseexplanations

the matters recorded in the certificate are true and correct

I confirm these matters by my signature to this acknowledgment and to the certificate

a translator was present and translated all written and spoken words to me and my responses OR

a translator was not required by me as I have an adequate command of the English language.

Signed: ..................................................... Signed: ......................................................

Dated: ..................................................... Dated: ......................................................


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Certificate by Translator/Interpreter

This certificate is provided by:

Name:

Address:

Occupation:

Details:

1. On [insert date] I attended a meeting at the office of:

Present at the meeting were [insert names of people present]

and me.

2. I spoke to:

in the language and I established that it is their customarylanguage.

3. I am fluent in the English language and the language, and Iam competent to translate between both those languages.

4. In the presence of [insert names of people present]

and before any documents were signed, I translated the explanations by the solicitor and thestatements made by:

from the English language to the language; and

from the language to the English language.

5. It was stated by:

that they understood the matters translated and they did appear to me to so understand.

6. I am independent of and not related to:

or to the borrowers

Signed:...................................................................................... Dated: .....................................................


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Attachment 2

INFORMATION STATEMENT

Things you should know about guarantees

This information tells you about some of the rights and obligations of yourself and the credit provider. It does

not state the terms and conditions of your guarantee.

GUARANTEES

1. What is a guarantee?

A promise by you that the person who is getting credit under a credit contract (the debtor) will keep toall the terms and conditions. If that person does not do so, you promise to pay the credit provider allthe money owing on the contract (and any reasonable enforcement expenses) as soon as the moneyis asked for, up to the limit, if any, stated in the guarantee. If you do not pay, then the credit providercan take enforcement action against you which may result in the forced sale of any property owned byyou such as your house.

2. How do I know how much the debtor is borrowing and how the credit chargesare worked out?

These details are on the copy of the credit contract or proposed credit contract that you should begiven before you sign the guarantee.

3. What documents should I be given?

Before you sign the guarantee you should get:

the document you are reading now; and

a copy of the credit contract or proposed credit contract.

Your guarantee is not enforceable unless you get a copy of the credit contract or proposed creditcontract before you sign.

Within 14 days after you sign the guarantee and give it to the credit provider, the credit provider mustgive you a copy of:

the signed guarantee; and

the credit contract or proposed credit contract (if you do not already have a copy of thecontract).

4. Can I get a statement of the amount the debtor owes?

Yes. You can ask the credit provider at any time for a statement of the amount the debtor currentlyowes or any amounts credited or debited during a period you specify or any amounts which areoverdue and when they became overdue or any amount payable and the date it became due.

The credit provider must give you the requested information: within 14 days if all the information requested related to a period 1 year or less before your

request is given; or

otherwise within 30 days.

This statement must be given to you in writing if you ask for it in writing but otherwise may be givenorally. You may be charged a fee for the statement. You are not entitled to more than 1 writtenstatement every 3 months.

5. How can I find out the payout figure?

You can write to the credit provider at any time and ask for a statement of the amount required to payout the credit contract as at any date you specify. You can also ask for details of the items that make

up the amount.The credit provider must give you the statement within 7 days after you give your request to the creditprovider. You may be charged a fee for the statement.


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6. What other information can I get?

You can write to the credit provider and ask for a copy of:

the guarantee; or

any credit-related insurance contract (such as insurance on mortgaged property) the creditprovider has; or

a notice previously given to you, the debtor or the mortgagor under the Consumer Credit Code.

The credit provider must give you the requested copy:

within 14 days of your written request if the contract came into existence 1 year or less beforethe request was given to the credit provider; or

otherwise within 30 days.

The credit provider may charge you a fee.

Your request can be made at any time up to 2 years after the end of the credit contract.

7. Can I withdraw from my guarantee?

Yes, by written notice to the credit provider, if:

you do so before the debtor gets any credit under the credit contract; or

at any time if the final credit contract is materially different from the proposed credit contractgiven to you before you signed the guarantee.

8. Can I limit my guarantee?

Yes, if it relates to a continuing credit contract (such as a credit card contract or an overdraft). In thatcase you can give the credit provider a notice limiting the guarantee so that it only applies to:

credit previously given to the debtor; and

any other amount you agree to guarantee.

9. Can my guarantee also apply to any future contracts?

No, unless the credit provider has given you a copy of the proposed new credit contract and you havegiven your written acceptance.

10. If my guarantee says I have to give a mortgage, what does this mean?

A mortgage means that you give the credit provider certain rights over any property you mortgage. Ifyou default under your guarantee, you can lose that property and you might still owe money to thecredit provider.

11. Should I get a copy of my mortgage?

Yes. It can be part of your guarantee or, if it is a separate document, you will be given a copy of themortgage within 14 days after your mortgage is entered into.

12. Is there anything that I am not allowed to do with the property I havemortgaged?

The laws says you cannot assign or dispose of the property unless you have the credit providers, orthe courts, permission. You must also look after the property. Read the mortgage document as well. Itwill usually have other terms and conditions about what you can and cannot do with the property.

13. What can I do if I find that I cannot afford to pay out the credit contract andthere is a mortgage over my property?

See the answer to question 22.

Otherwise you may:

if the mortgaged property is goods give the property back to your credit provider, together with

a letter saying you want the credit provider to sell the property for you;

OR


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sell the property, but only if the credit provider gives you permission first;

OR

give the property to someone who may then pay all amounts owing under the guarantee or givea similar guarantee, but only if the credit provider gives permission first.

If the credit provider wont give permission contact your Government Consumer Agency for help.

You should understand that you may owe money to the credit provider even after mortgaged propertyis sold.

14. Can the credit provider take or sell the mortgaged property?

Yes, if you have not carried out all of your obligations under your guarantee.

15. If the credit provider writes asking me where the mortgaged goods are, do Ihave to say where they are?

Yes. You have 7 days after receiving the credit providers request to tell the credit provider. If you donot have the goods you must give the credit provider all the information you have so they can betraced.

16. When can the credit provider or its agent come into a residence to takepossession of mortgaged goods?

The credit provider can only do so if it has the courts approval or the written consent of the occupierwhich is given after the occupier is informed in writing of the relevant section in the Consumer CreditCode.

17. If the debtor defaults, do I get any warning that the credit provider wants totake action against the debtor?

In most cases both you and the debtor get at least 30 days from the date of a notice in writing to dosomething about the matter. The notice must advise:

why the credit provider wants to take action; and

what can be done to stop it (if the default can be remedied); and that if the same sort of default is committed within 30 days of the date of the notice and is not

remedied within that period, the credit provider can take action without further notice.

You should immediately discuss any warning notice with the debtor and consider getting independentlegal advice and/or financial advice.

However, there will be no warning notice if:

there is good reason to think the debtor committed a fraud to persuade the credit provider toenter into the contract; or

the credit provider has been unable to locate the debtor after making reasonable efforts to doso; or

the court says so; or

there is good reason to think that the debtor has, or will, remove or dispose of mortgaged goodswithout the credit providers consent, or that urgent action is necessary to protect mortgagedproperty.

18. When can the credit provider enforce a judgment against me?

When:

the credit provider has judgment against the debtor and if the judgment amount has still notbeen met 30 days after the credit provider has asked the debtor in writing to pay it; or

the court says so because recovery from the debtor is unlikely; or

the credit provider has been unable to locate the debtor after making reasonable efforts to do

so; or

the debtor is insolvent.


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19. If the debtor cannot be found and the credit provider intends to take legalaction against me do I get any warning?

You may not. See the answer to question 17.

20. Can the credit provider take action against me without first taking actionagainst the debtor?

Yes, but the credit provider will not be able to enforce any judgment against you except in thecircumstances described in the answer to question 18.

21. How much do I have to pay the credit provider if the debtor defaults?

You have to pay what the debtor owes the credit provider, subject to any limit provided in theguarantee, plus the credit providers reasonable expenses in making you honour your contractguarantee.

GENERAL

22. What can I do if I am asked to pay out the credit contract and I cannot pay it allat once?

Talk to the credit provider and see if some arrangement can be made about paying. If you cannotcome to a suitable arrangement, contact the Government Consumer Agency. There are other people,such as financial counsellors, who may be able to help.

23. If I pay out money for a debtor, is there any way I can get it back?

You can sue the debtor, but remember, if the debtor cannot pay the credit provider, he or she probablycannot pay you back for a while, if at all.

24. What happens if I go guarantor for someone who is under 18 when he or shesigns a credit contract?

You are responsible for the full debt if the contract of guarantee has a clear and obvious warning. Thewarning has to tell you that the courts might not let you sue the debtor if you have to pay out the creditcontract for him or her.

25. Do I have any other rights and obligations?

Yes. The law does give you other rights and obligations. You should also read your guarantee careful.

If you have any doubts, or you want more information, contact the Government ConsumerAgency or get legal advice.

Please keep this information statement. You may want some information from it at a later date.


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Instructions for Completion ofGuarantee & Indemnity Agreement

WARNING

The Consumer Credit Code and Regulations require each credit contract, guarantee or a notice givenby a credit provider under the Code to be easily legible and clearly expressed.The print or type must be not less than 10 point.

Var What to insert

V0 Date of the Guarantee & Indemnity Agreement

V1 Name of the lender

V2 Address of the lender

V3 Name of guarantor 1

V4 Address of guarantor 1

V5 Name of guarantor 2

V6 Address of guarantor 2

V7 Name of borrower 1

V8 Address of borrower 1

V9 Name of borrower 2

V10 Address of borrower 2

V11 Limit on guaranteed money (mark Yes box with a tick)

V12 If Yes box ticked, insert amount in words of limit on guaranteed money

V13 No stated monetary l imit on guaranteed money (mark No box with a tick).

Note: If the No box is marked, ensure that each guarantor initials in the space indicatedopposite

Attachment 1 Certificate of Independent Legal Advice

V14 Name of solicitor giving independent legal advice

V15 Firm of solicitor giving independent legal advice

V16 Address of solicitor giving independent legal advice

V17 Descriptions of relevant credit contract/s and any mortgage documents

V18 Descriptions of other relevant documents (if any)

V19 Descriptions of relevant documents for identification of guarantor

V20 Name of translator translating independent legal advice

V21 Address of translator translating independent legal advice

V22 Occupation of translator translating independent legal advice

V23 Name of language

guarantee & indemnity agreement

Documents