What is a guarantee agreement and when to use it

A guarantee (surety) is a written promise by a third party – the guarantor – to fulfill the debtor’s obligation if the debtor fails to do so.
It provides the creditor with additional assurance and enforcement option.

Common use cases:

• parents guaranteeing child’s loan,

• business partner securing a loan of their company,

• guarantee in rental or business contract.

Legal framework

Regulated by the Czech Civil Code (Sections 2018–2027).
The guarantee must be in writing to be valid.

Once the debt is due, the creditor can demand payment directly from the guarantor.

Key elements of a guarantee agreement

• Identification of creditor and guarantor

• Clear description of the secured debt

• Explicit wording: “I guarantee…”

• Date and handwritten signature

• Optional: limit of guarantee, deadlines, partial liability

Common mistakes

• Verbal guarantees (invalid)

• No clear identification of the debt

• Guarantor unaware of the legal risk

• Ambiguity in terms of when creditor can demand payment

• Lack of delivery proof to creditor

Recommendations

Guarantor:

• Never sign unless fully aware of legal consequences

• Require precise definition of the debt covered

Creditor:

• Ensure written form and exact wording

• Avoid ambiguity regarding scope and enforceability

Practice tip

Guarantee obligations survive the death of the guarantor – liability may pass to heirs.
Always seek legal advice for major financial commitments.

Guarantee template – available for a symbolic fee

I offer a simple Czech-English template for a loan or lease guarantee.

Delivered quickly by e-mail for a symbolic fee.
For more complex agreements, I can provide tailored documentation.

Reach out via e-mail or contact form – clear and fast assistance.

FINAL THOUGHTS – WHAT NOW?

A guarantee agreement isn’t just a formality – it’s a legal shield, if drafted properly. And a trap, if not.

Do you want to be sure your contract will hold up even in a crisis? Get in touch and let’s schedule a meeting.