Guarantee, Termination
To: (Holder of Guarantee)
Dear
____________:
This
notifies you formally of our termination of our Guarantee, effective
immediately, related to our Guarantee, a copy of which is enclosed, and was
given to you by us pursuant to which we guaranteed the ongoing obligations of
__________________ (Name).
Please
accept this letter as formal notification to you that I am terminating all
future obligations under the Guarantee effective as today’s date, under this
Guarantee and any other (s) you may be holding relating to this matter.
This
termination notice is given to you in accordance with the terms and conditions
of the
Guarantee.
Yours
very truly,
_______________ Date:
_________________
Maker of Guarantee
Maker of Guarantee
cc
Person or Entity whose obligations were guaranteed.
Exhibit 1: Copy of Guarantee
Guarantee, Termination
Review List
This review list is provided to inform you about the
document in question and assist you in its preparation. Terminating your guarantee only limits your
liabilities from the date received by the party who has your guarantee. Therefore, you must send it by registered
mail, by courier with signature required, or by a recognized overnight delivery
service by a firm such as FedEx.
You should only take
this action if you believe the party whose debt you are guaranteeing will continue
to make payments against the guarantee outstanding and the party holding the
guarantee will not just use this to call the debt and therefore put you back in
the same place you were before, except matters may be even worse now if you
have triggered a default on the matter.
These terminations are
usually used by principals in businesses who no longer have those roles and
whose guarantees were secondary, or good faith, guarantees of the debts in
question. In these instances, the
Termination can be very helpful over the long term to extricate you from these
contingent liabilities. I have made use
of this approach effectively in the past when selling a business or
transferring management roles to another party.
The key cautionary note
is to avoid taking this action if you believe it will trigger a default which,
in turn, will weaken the original party and put your guarantee front and center
for collection by the holder of your guarantee.
Watch out for this boomerang problem.
0 comments:
Post a Comment