Commentary

43.1 Usual types of parent company guarantee

BOILERPLATE AND COMMERCIAL CLAUSES vol 4(3)
| Commentary

43.1 Usual types of parent company guarantee

| Commentary

43: PARENT COMPANY GUARANTEES

(For parent company guarantees see Form 43.1 [1658] onwards.)

43.1 Usual types of parent company guarantee

Typically, a contracting party will demand a parent company guarantee where the other party is a subsidiary company within a group, and where the first party is concerned that the subsidiary might not be able to meet its contractual commitments or might be liquidated by the parent if problems were to arise under the contract. Alternatively, the first party may have entered into the contract on the basis that the other party:

  1. (a)

        is part of a large and reputable group; or

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