Free guarantee and indemnity template (Australia)
A free Australian guarantee and indemnity template from Quillio is a document by which a guarantor (typically a company director or related party) guarantees the obligations of a principal debtor (typically a company) and indemnifies the creditor against loss. Guarantee and indemnity documents are standard in commercial leasing (landlord requires director guarantee), lending (bank requires director guarantee for company loans), and commercial transactions. The indemnity component is critical because it creates a primary obligation, not just a secondary one.
Guarantee vs indemnity
A guarantee is a secondary obligation — the guarantor promises to perform the principal debtor's obligations if the debtor defaults. An indemnity is a primary obligation — the indemnifier promises to make good the creditor's loss regardless of the debtor's default. Including both protects the creditor because: if the underlying obligation is void or unenforceable (which would discharge the guarantee), the indemnity still stands as an independent obligation.
Key clauses
Guarantee clause (guarantor guarantees the debtor's obligations); indemnity clause (guarantor indemnifies creditor against loss); continuing guarantee (not discharged by partial payment or time extensions); preservation of rights (creditor can grant time or indulgences to debtor without discharging guarantor); principal debtor clause (guarantor is treated as principal debtor for enforcement); waiver of defences; and limitation of liability (if applicable).
How I generate guarantee and indemnity documents
Provide the creditor, guarantor, principal debtor, and the underlying obligations being guaranteed. I produce a guarantee and indemnity with all standard protective clauses. I also flag risks for the guarantor — unlimited personal liability, continuing nature of the guarantee, and waiver of defences — so the lawyer advising the guarantor can ensure informed consent.
Common issues
- Directors signing personal guarantees may not understand they are exposing personal assets — always ensure independent advice
- A guarantee without the indemnity component is vulnerable to defences based on the invalidity of the underlying obligation
- The guarantee should specify whether it is continuing (survives partial payment and amendments) or limited to a specific amount
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