Personal & Individual

Guarantee Letter

A Guarantee Letter is a formal commitment by a guarantor to meet another party's obligations if they default. Used for loans, leases, and business contracts.

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What this document covers

Guarantor and beneficiary details
Principal debtor details
Obligation being guaranteed
Maximum guaranteed amount
Conditions for calling on the guarantee
Duration of the guarantee
Whether the guarantee is demand or conditional
Governing law clause

Frequently Asked Questions

Is a guarantee enforceable in Kenya?
Yes. Under the Contracts Act (Cap. 23) and the Statute of Frauds principles adopted in Kenya, a guarantee must be in writing and signed by the guarantor to be enforceable. An oral guarantee is not binding in Kenya for most purposes.
What is the difference between a guarantee and an indemnity?
A guarantee is a secondary obligation — the guarantor is only liable if the principal debtor defaults. An indemnity is a primary obligation — the indemnifier is liable regardless of whether the debtor defaults. An indemnity is stronger for the creditor and harder to escape for the indemnifier.
Is a guarantee valid in common law countries?
Yes. Guarantees must be in writing under the Statute of Frauds across most common law jurisdictions. The key distinction between a guarantee and an indemnity is the same in the UK, Australia, Kenya, and other common law countries.