Q&As

Is a guarantee given over email valid?

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Produced in partnership with Albert Sampson
Published on LexisPSL on 18/09/2017

The following Banking & Finance Q&A produced in partnership with Albert Sampson provides comprehensive and up to date legal information covering:

  • Is a guarantee given over email valid?
  • Summary
  • Formalities for creating a guarantee
  • Guarantees given over email
  • Virtual signings
  • Conclusion

Is a guarantee given over email valid?

Summary

Provided that the other requirements for creating a contract are met, a guarantee can be validly created over (or evidenced by) email, as email is capable of fulfilling the requirement that a guarantee be in, or be evidenced by, writing and signed. As an alternative, where the parties wish to execute a formal contract or deed of guarantee, but one or more of them is not able to attend a physical signing, they should consider a ‘virtual’ signing, as discussed below.

Formalities for creating a guarantee

Pursuant to a guarantee, one person agrees to answer for the liabilities of another or gives undertakings to procure that another person performs its obligations (eg a parent company guaranteeing that its subsidiary will carry out its contractual obligations). In the banking and finance context, guarantees generally relate to repayment obligations under loan facilities (whether in connection with a specific transaction, or pursuant to an all monies guarantee).

A guarantee is a contract and therefore there must be an offer, acceptance and consideration in order to create a guarantee. In order to avoid disputes about whether valid consideration has been given, guarantees are often given by way of deed. To execute a valid deed, a number of formalities must be observed. See Practice Note on Deeds for a detailed explanation of what is required.

In addition

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