Guarantee And Indemnity Template
A guarantee and indemnity combines two protections — a promise to answer for another's debt, and a direct obligation to make the creditor whole — for stronger cover.
What's included
- Understand the difference between a guarantee and an indemnity
- See why the two are often combined
- Identify the core elements of the document
- Appreciate the seriousness for the guarantor
- Know why legal review is essential here
8 min read
The template
This general template combines a guarantee with an indemnity. Because it can expose personal assets, treat the placeholders as prompts only.
GUARANTEE AND INDEMNITY
Guarantor: [Full name] of [address]
Creditor: [Creditor legal name] ABN [ABN]
Customer: [Company name] ACN [ACN]
Date: [Date]
1. Guarantee
The Guarantor guarantees the due payment of all amounts the
Customer owes the Creditor ('Guaranteed Money').
2. Indemnity
As a separate obligation, the Guarantor indemnifies the Creditor
against any loss the Creditor suffers if any Guaranteed Money is
not recoverable from the Customer (for example, because of the
Customer's insolvency).
3. Principal obligation
The Guarantor's obligations are primary and not affected by any
change to the trading terms, time given to the Customer, or the
Customer's release.
4. Payment on demand
The Guarantor will pay on the Creditor's written demand.
5. Independent advice
The Guarantor confirms the opportunity to obtain independent legal
and financial advice before signing.
Signed by the Guarantor: ____________ Witness: ____________Two protections, one document
A guarantee is a promise to answer for someone else's debt, so it can be affected by what happens to the customer's obligation. An indemnity is a direct, standalone promise to make the creditor whole, which can survive situations that weaken a pure guarantee — such as the customer's debt becoming unenforceable. Combining them is common precisely because each covers gaps the other might leave. The trade-off is that the document is correspondingly serious for the person signing it.
How to use it
Take it at onboarding, alongside the credit account and terms of trade, not after things go wrong. Name the guarantor in full, have them sign in their personal capacity, witness it, and keep the original. Because of what is at stake, encourage the guarantor to get their own advice. If a guaranteed account later defaults, a clean guarantee and indemnity strengthens any recovery; you can refer the debt with it attached. See the simpler version in the personal guarantee template.
Not legal advice
This is a general template and general information only — not legal advice. Guarantees and indemnities have significant legal consequences and are often challenged. Have any guarantee and indemnity drafted or reviewed by a lawyer before it is signed or relied upon.
Tips
- A guarantee promises to answer for another's debt; an indemnity stands alone.
- Combining them covers gaps either might leave.
- Take it at onboarding and have it properly executed.
- It is a high-stakes document — get it reviewed.
FAQ
Why combine a guarantee with an indemnity?
An indemnity can survive situations that weaken a pure guarantee, so the two together give broader cover. Whether it suits you depends on the facts. This is general information, not legal advice.
Is this harder for a guarantor to escape?
The indemnity element can make the cover more robust, but guarantees and indemnities are still challenged. Proper drafting and execution matter.
Should the guarantor get their own advice?
Yes. Independent advice protects the guarantor and reduces the risk of a later challenge based on misunderstanding.
Templates are a head start — not legal advice
Customise to your business and have important documents reviewed. Need to recover a debt? We can help.