The Skinny on Personal Guarantees

Our readers have often heard of the phrase “personal guaranty” but are unsure what a “personal guaranty” is. Today, we’ll help dispel some of the mysteries surrounding the same.

What Is a Personal Guaranty?

Simply put, a personal guaranty is a promise by a third party to fulfill the payment obligations of a contracting party should that party fail (“default”) on its payment obligations.

For example: Suppose that Alan and Bree enter into a contract in which Alan promises to pay Bree $15,000.00 for some products or services that Alan desires, but Bree is concerned that Alan might not fulfill his payment obligations (perhaps Alan has a history of missing payments). To alleviate Bree’s concerns, Alan could recruit a third party to step in Alan’s shoes to guarantee his payment obligations if he (Alan) defaults on his payment obligations. This third person is called the “Guarantor.”

What Does a Personal Guaranty Look Like?

A typical personal guaranty would, at the minimum, contain language similar to this:

The Guarantor absolutely, unconditionally, and irrevocably guarantees, as primary obligor and not merely as surety, the punctual payment, when due, whether at stated maturity, by acceleration, or otherwise, of all present and future obligations, liabilities, covenants, and agreements required to be observed, performed, or paid by [insert name of the party who owes money] whether for principal, interest, costs, expenses.

What are the Requirements for a Personal Guaranty?

At the very minimum, a personal guaranty should be in writing and, without question, signed by the Guarantor.


In short, personal guaranties potentially assist with contracting arrangements that might otherwise not exist in the absence of such a guaranty. There are, however, several things to be aware of in considering the same.

For more information on how to draft a personal guaranty and the requirements for a personal guaranty, please contact us at

This material is provided for informational purposes only. It is not intended to constitute legal advice, nor does it create a client-lawyer relationship between MNK Law and any recipient. Recipients should consult with counsel before taking any actions based on the information contained within this material.