What to keep in mind
Compare personal guarantees, security interests, retained sums, deposits and enforcement mechanisms, considering scope and expiry.
A nominal guarantee from an insolvent guarantor may offer little practical protection.
Distinctions often confused
A performance guarantee and a payment guarantee secure different underlying duties.
Frequently asked questions
Should every long-term contract require security?
It depends on counterparty risk, transaction size and bargaining conditions.
Can guarantees be enforced immediately after a breach?
Only under the instrument and applicable procedural requirements.
Informational content. It is not a substitute for professional advice.