LIABILITY As with other written contracts, it is important to carefully read the guarantee to understand the liability of the surety and all the requirements that the creditor must meet before requesting payment of a debt. But a contract is a contract, and the creditor has a legal right to obtain a personal guarantee on his terms. This means that the seller can remain legally responsible for the commercial debt even after the sale of this transaction. You may find that your role as guarantor also has financial implications flow-on. For example, it may be more difficult for you to obtain financing from a bank. This is due to the fact that your personal wealth is already threatened by the guarantee. Calendars 1, 2, 3, 4, 5 and 6 should include details on contracts, employees, intellectual property, investments, assets and third-party assets. It may not be possible to have a list of all contracts by type of business, and each transaction will have a tailored agreement. Section 7.4 of Schedule 7 should be used when administrative accounts are established. Other pension guarantees may be included in paragraph 15.3 if necessary.
A guarantee of the accuracy of responses to due diligence requests is contained in paragraph 17.2 and the date of these responses must be included. A brief set of tax guarantees is included in paragraph 18. Since the shares are not sold, the buyer does not acquire the seller`s tax liabilities and therefore does not need to be as detailed as in a purchase and sale contract. However, the buyer will want guarantees regarding the tax treatment of the assets, the plant and the employees. Personal warranty insurance: For buyers, it may also be helpful to consider personal warranty insurance. This type of insurance helps protect your personal property if a company`s debts are called. Most sellers do not want this responsibility because they no longer control the success or failure of the company. This often leads to negotiations with the buyer in order to assume financial responsibility for the guarantee.
However, the personal guarantee is a contract between the seller and the original creditor, so that any release from the seller requires the written agreement of that creditor. As most entrepreneurs know, owning, managing, selling and buying businesses carries risks. Proper planning and negotiation reduces the risks associated with personal guarantees for both sellers and buyers. By providing a personal guarantee, you personally support the risk of transactions with the transactional unit (z.B your business). Therefore, if the buyer does not pay the purchase price, the seller can take legal action against you as a guarantor. If you don`t have the money to pay the seller, the seller can go after your personal fortune. Giving a personal guarantee is something that should never be taken lightly. Sometimes you have no choice, for example, if you are the director and shareholder of a company looking for financing.
Other times, do – for example; If your child asks you for a personal guarantee to support your application to a home. In this situation, you need to know exactly what you are getting into and what risk you and your personal wealth are taking.