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Personal Guarantees — Breach and Enforcement

A personal guarantee is a legal document which often accompanies a contract or loan instrument which ensures that the creditor (i.e., the person making the loan or on the other side of the contract) can personally collect money from the debtor in case of breach or default.

Creditors insist on personal guarantees because it provides them an additional assurance that their investment is protected. The reason that a personal guarantee is necessary is because very often a contract and/or loan will be with a business entity. Because business entities such as corporations are entities which are separate and distinct from the business owner, in the case of breach of contract or default, and absent a personal guarantee, a creditor’s only recourse will be the business entity itself — which may not be worth suing.

Contact us regarding personal gurantees, their construction, interpretation, breach and/or enforcement.

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