Ireland—Guarantees

Copyright © 2025 LexisNexis
Produced in partnership with William Johnston of ByrneWallace LLP
Practice notes

Ireland—Guarantees

Copyright © 2025 LexisNexis

Produced in partnership with William Johnston of ByrneWallace LLP

Practice notes

Guarantees are typically used in banking transactions as a form of collateral for a debt. In such circumstances, they are a contractual arrangement where one party (the guarantor) agrees to answer for the liability of another party (the principal) to another party. They do not create rights over property. In this context, guarantees are characterised as quasi-security.

This Practice Note examines:

  1. •

    the key characteristics of guarantees

  2. •

    how guarantees are used in financing transactions

  3. •

    why lenders prefer guarantee documentation to include both a guarantee and an indemnity

  4. •

    which obligations are commonly guaranteed in finance transactions—obligations under a specific transaction or ‘all monies’?

  5. •

    whose obligations are commonly guaranteed in finance transactions

  6. •

    the use of limited guarantees, and

  7. •

    the importance for lenders of understanding the rights of guarantors and guarantor protections.

This Practice Note does not deal with on demand guarantees.

Characteristics of guarantees

A guarantee is a secondary obligation in a tripartite structure.

Meaning of tripartite structure

A guarantee is a promise by one party (the guarantor) to another party (the guaranteed

William Johnston
William Johnston

Solicitor, ByrneWallace LLP

William Johnston is an economics graduate of Trinity College Dublin; he qualified as a solicitor while training in McCann FitzGerald LLP and was a partner in Arthur Cox LLP for 30 years where he was head of the Financial Services Department for 16 years and Chair of the Learning and Development Committee for ten years; he is now a Consultant with ByrneWallace LLP; he was Chair of the Law Society’s Business Law Committee for two years and has lectured in the Law Society’s Diploma in Finance Law for 20 years and is currently the Law Society’s external Examiner in Banking Law and the lecturer on legal opinions in the Law Society’s Professional Course; he was a Board member of UCD’s Commercial Law Centre for six years and is a member of the editorial Boards of Commercial Law Practitioner, Butterworths Journal of International Banking and Financial Law and Business Law International; he represented the Law Society on the Company Law Review Group in 1994 and was a Ministerial nominee to the Company Law Review Group from 2000 to 2018 during which he chaired seven subcommittees; he was the first chair from Ireland of the Banking Law Committee of the International Bar Association where he also chaired the Banking Law Regulation sub-committee and the Legal Opinions sub-committee; his publications include Banking and Security Law in Ireland (1998 Butterworths) (2000 Bloomsbury Professional) and for Oxford University Press Set-off Law and Practice (2006, 2010, 2018) and Security over Receivables (2008).

Read moreRead more
Powered by Lexis+®
Jurisdiction(s):
Ireland

Popular documents

Late payment penalties—inheritance tax

Late payment penalties—inheritance taxWhile interest often accrues on overdue tax, the late payment of certain taxes may also attract a penalty. For information on the interest accruing on overdue tax, see Practice Notes: IHT—payment deadlines on death—Interest on IHT and Interest on late paid

If a beneficiary signs a deed of disclaimer of their share of an estate and the estate pays their legal

If a beneficiary signs a deed of disclaimer of their share of an estate and the estate pays their legal fees, will that count as a PET against their estate?A disclaimer is the refusal of a gift prior to acceptance. The refusal of the gift must take place before the beneficiary accepts any benefit

Contributory negligence in personal injury claims

Contributory negligence in personal injury claimsContributory negligence is a partial defence which can lead to a discount in damages.Other defences may also be relevant. See Practice Notes: Did the claimant consent to the risk of injury? and Was the claimant involved in an illegal activity?If a

Can shares in a limited company that have not been paid-up at all be cancelled?

Can shares in a limited company that have not been paid-up at all be cancelled?A limited company having a share capital may not alter that share capital, except in the ways listed in section 617 of the Companies Act 2006 (CA 2006). Shares in a company cannot simply be cancelled without following an