A specific guaranty note states that even when a guarantor is providing insurance or guaranty to the other party, he is not obligated to accept the claim of the guaranty unless the claiming person fulfills the requirements of the guaranty note i.e. situation, conditions, time and type of claim. A specific guaranty note states that the guarantor is legally obligated to provide the guaranty for only a specific part or only in specific situations.
Brief Description of Specific Guaranty Note:
There are basically two types of guaranty notes including limited guaranty notes and unlimited guaranty notes. Specific guaranty note lies in the limited guaranty section as it not only limits the claiming rights of the other party but also frees the guarantor from all types of guaranty claims. For professional and business reasons, it is important to sign a guaranty agreement or contract where on the other hand, if you are signing the guaranty with your friends, family members or coworkers, there is no need to use the legal agreement but you can prepare the guaranty note by yourself. As long you include all the key elements in the specific guaranty note, even if you prepare this note by yourself without involving any legal help, it has legal value and you can use it as proof for any legal disputes.
Key elements to include in the Specific Guaranty Note:
- Name of the guarantor with complete address
- Name of the creditor with address
- Date when the guaranty note is signed
- Details of the specific guaranty
- Terms and conditions that the claiming person needs to fulfill for guaranty
- Violation of the note
- Termination and expiration of the note
- Validation and expiry of the guaranty note i.e. 1 month or 1 year
- Signature of both parties and witnesses
Advantages and disadvantages of Specific Guaranty Note:
When we talk about specific or limited guaranty note, it has both the benefits and flaws for both parties i.e. guarantee and guarantor. We can start with the benefits and advantages the specific guaranty note brings to both parties. Specific guaranty note has the benefit of freeing the guarantor from a wide range of liabilities and even if he signed the note, he doesn’t need to provide guarantor to the creditor unless it fulfills the requirements mentioned in the guaranty note. Second, both the parties i.e. guarantor and the creditor can easily negotiate the terms and conditions of the specific guaranty note and they can either eliminate or add clauses in the note too.
On the other hand, when we talk about the flaws and disadvantages of specific guaranty note, the first setback is that it doesn’t have as much legal value as a guaranty agreement. Usually these guaranty notes are prepared by individuals without involving legal help and most of the time, both parties miss important terms that lead to disputes and errors in future. Also, with the specific guaranty note, the creditor can’t ask for or claim the guaranty unless he fulfills the requirements mentioned on the guaranty note which makes his claim rights limited.
Here is preview of a Free Sample Specific Guaranty Note created using fill-able PDF format,
Here is download link for this Specific Guaranty Note,