Personal Guarantee (Australia)
This Personal Guarantee (the “Guarantee”) is given on [Guarantee Date] by:
[Guarantor Name], of [Guarantor Address], [Guarantor City], [Guarantor State] [Guarantor Postcode], Australia (the “Guarantor”)
in favour of:
[Beneficiary Name], [Beneficiary ABN/ACN], of [Beneficiary Address], [Beneficiary City], [Beneficiary State] [Beneficiary Postcode], Australia (the “Beneficiary”)
in respect of all obligations of:
[Company Name], [Company ACN/ABN], of [Company Address], [Company City], [Company State] [Company Postcode], Australia (the “Company”).
BACKGROUND
The Beneficiary has agreed to extend credit, provide goods or services, or enter into commercial arrangements with the Company pursuant to [Underlying Obligation] (collectively, the “Obligations”). As a condition of doing so, the Beneficiary has required the Guarantor to personally guarantee the Obligations.
In consideration of the Beneficiary agreeing to enter into or continue its arrangements with the Company, and for other good and valuable consideration (the receipt and sufficiency of which the Guarantor hereby acknowledges), the Guarantor agrees as follows:
1. PERSONAL GUARANTEE
1.1 The Guarantor unconditionally and irrevocably guarantees to the Beneficiary the due and punctual performance by the Company of all of the Obligations, including the payment of all money now or in the future owing by the Company to the Beneficiary under or in connection with the Obligations.
1.2 If the Company fails to perform any of the Obligations when and as required, the Guarantor shall, upon demand in writing from the Beneficiary, perform those Obligations or pay to the Beneficiary the amounts owing immediately, as if the Guarantor were the principal obligor.
1.3 The Guarantor’s liability under this Guarantee is primary and direct. The Beneficiary is not required to first demand performance from the Company, enforce any security, or pursue any other remedy before making a demand against the Guarantor.
1.4 The Guarantor’s liability under this Guarantee shall not be reduced, released, or discharged by any act, omission, event, or matter that would otherwise discharge a surety at law or in equity, including any variation of the Obligations, any grant of time or indulgence by the Beneficiary to the Company, or any release of any other guarantor or security.
2. INDEMNITY
2.1 As a separate and independent obligation from the guarantee in clause 2, the Guarantor indemnifies and keeps indemnified the Beneficiary from and against all losses, liabilities, damages, costs, and expenses (including legal costs on a solicitor-client basis) suffered or incurred by the Beneficiary arising from:
(a) any failure or default by the Company to perform any of the Obligations;
(b) the Obligations or any part of them being or becoming void, voidable, or unenforceable for any reason; or
(c) the Beneficiary’s enforcement or attempted enforcement of this Guarantee or any right arising under the arrangement with the Company.
2.2 This indemnity is a primary obligation and survives any discharge of the Company’s Obligations. It is enforceable even if the guarantee in clause 2 is for any reason unenforceable.
3. GENERAL PROVISIONS
3.1 Writing. This Guarantee is in writing and signed by the Guarantor as required for enforceability under the applicable state or territory legislation of [Governing State] continuing the requirements of the Statute of Frauds.
3.2 Corporations Act. Where the Guarantor is a director of the Company, this Guarantee is given consistently with the Guarantor’s duties under the Corporations Act 2001 (Cth).
3.3 Entire Agreement. This Guarantee constitutes the entire agreement of the Guarantor with respect to the personal guarantee of the Obligations and supersedes all prior representations, negotiations, and understandings relating to that subject matter.
3.4 Severability. If any provision of this Guarantee is void, voidable, or unenforceable, that provision shall be severed and the remaining provisions shall continue in full force and effect.
3.5 Governing Law. This Guarantee is governed by the laws of [Governing State], Australia. The Guarantor irrevocably submits to the non-exclusive jurisdiction of the courts of [Governing State] and the Federal Court of Australia.
3.6 Independent Legal Advice. The Guarantor acknowledges that, prior to signing this Guarantee, the Guarantor was given the opportunity to obtain independent legal advice from a solicitor of the Guarantor’s own choosing about the nature and effect of this Guarantee.
EXECUTED as a deed on the date first stated above.
SIGNED by [Guarantor Name] as Guarantor:
Name: [Guarantor Name]
Address: [Guarantor Address], [Guarantor City], [Guarantor State] [Guarantor Postcode]
Guarantor
________________
Signature
Date: ________________
Witness
________________
Signature
Date: ________________
What Is a Personal Guarantee (Australia)?
A Personal Guarantee in Australia commits a guarantor to meet another party's obligations if they default and defines the extent of that liability, enforceable under the National Consumer Credit Protection Act 2009 (Cth).
Personal guarantees are one of the most significant financial commitments an individual can make. Unlike a commercial contract between two businesses, a personal guarantee pierces the corporate veil and transforms an otherwise limited corporate liability into a direct, unlimited personal exposure. A director who signs a personal guarantee for their company's bank loan is personally on the hook if the company defaults — and the bank can pursue the director's home, savings, and other personal assets to recover the debt.
In Australia, the enforceability of a personal guarantee depends on several requirements. The guarantee must be in writing and signed by the guarantor, as required by state and territory legislation that continues the Statute of Frauds requirements. The guarantee must be supported by consideration — typically the benefit the guarantor derives (directly or indirectly) from the beneficiary's agreement to deal with the company. And the guarantee must not have been obtained by unconscionable conduct, undue influence, or misrepresentation.
The template is structured as a combined guarantee and indemnity, which is the standard approach in Australian commercial practice. The guarantee element is a secondary obligation — enforceable against the guarantor when the company fails to perform. The indemnity element is a primary and independent obligation — enforceable against the guarantor even if the underlying agreement between the company and the beneficiary is void or unenforceable for any reason. Together, these two mechanisms give the beneficiary thorough protection.
The Personal Property Securities Act 2009 (Cth) and the PPSR may also be relevant in the context of trade credit, but the personal guarantee operates independently of any security interest registered over the company's assets.
The legal framework governing the Personal Guarantee (Australia) in Australia draws on several key statutes and regulatory bodies. Under the Corporations Act 2001 (Cth) and the Australian Securities and Investments Commission Act 1989, ASIC regulates financial products and services. The National Consumer Credit Protection Act 2009 (Cth) governs consumer lending. The Australian Taxation Office (ATO) applies stamp duty through state revenue offices. The Australian Financial Complaints Authority (AFCA) resolves consumer financial disputes. The Reserve Bank of Australia (RBA) sets monetary policy affecting interest rate obligations in financial agreements. Parties executing a Personal Guarantee (Australia) in Australia should confirm the document reflects current law, including any amendments enacted since the original drafting date. The National Consumer Credit Protection Act 2009 (Cth) sets the foundational requirements.
When Do You Need a Personal Guarantee (Australia)?
A Personal Guarantee is needed in Australia whenever a creditor, lender, or supplier requires an individual to stand personally behind the obligations of a company or other entity. The most common situations in which a personal guarantee is required include the following.
Bank and commercial lending. Australian financial institutions almost invariably require company directors to personally guarantee business loans, overdraft facilities, trade finance lines, and equipment finance. The personal guarantee is a fundamental credit enhancement tool for lenders dealing with closely-held proprietary companies that have limited assets or a short operating history.
Commercial leases. Landlords letting premises to corporate tenants routinely require a personal guarantee from the company's directors or from a related entity with substantial assets. Without a guarantee, the landlord's only recourse on a default by a shell company or a newly incorporated entity would be against that company, which may have no realisable assets.
Trade credit. Suppliers who extend credit terms to business customers — allowing them to receive goods or services before paying — frequently require a personal guarantee from the company's directors as a condition of opening a credit account. This is particularly common where the customer is a new business, a startup, or a company that is not well-known to the supplier.
Franchise arrangements. Franchisors commonly require personal guarantees from franchisees who operate through a company or trust, to confirm that the franchisor has direct recourse against the individual operators in the event of a default under the franchise agreement.
Government contracts and licences. Some government agencies and regulatory bodies require a personal guarantee as a condition of granting a licence or entering a government contract with a corporate applicant.
Intra-group arrangements. Within corporate groups, a parent company may be required to guarantee the obligations of a subsidiary to a third-party financier, insurer, or counterparty.
What to Include in Your Personal Guarantee (Australia)
A well-drafted Australian Personal Guarantee should address several key legal and commercial elements.
Identification of the parties. The document must clearly name the Guarantor (the individual), the Company (the principal debtor whose obligations are guaranteed), and the Beneficiary (the creditor in whose favour the guarantee is given). For company beneficiaries and company debtors, the ABN or ACN should be included to prevent any ambiguity about corporate identity.
Guarantee clause. The guarantee clause must contain an unconditional and irrevocable commitment by the Guarantor to personally meet the Company's obligations if the Company fails to do so. It should confirm that the Guarantor's liability is direct and primary — the Beneficiary is not required to exhaust its remedies against the Company or enforce any security before calling on the Guarantor.
Indemnity clause. The indemnity clause creates a separate, primary obligation by the Guarantor to keep the Beneficiary harmless from all losses, costs, and liabilities arising from the Company's failure to perform. This is essential to confirm that the guarantee remains enforceable even if the underlying contract is found to be defective.
Liability cap. The Guarantor may negotiate a cap on personal liability at a specified dollar amount. Without a cap, the guarantee is unlimited and covers all of the Company's present and future obligations to the Beneficiary, which may be difficult to quantify at the time of signing.
Corporations Act acknowledgment. Where the Guarantor is a director of the Company, the document should acknowledge the Guarantor's capacity and confirm compliance with the director duty provisions of the Corporations Act 2001 (Cth).
ACL clause. The Australian Consumer Law unfair contract terms regime may apply to this guarantee if the Beneficiary is a small business. The template includes a balanced ACL clause that acknowledges this statutory framework and provides that any void term will be severed without affecting the remainder of the guarantee.
Independent legal advice. The guarantee should confirm that the Guarantor was given the opportunity to obtain independent legal advice before signing. This is the single most important protection against a challenge for unconscionable conduct.
Governing law. The guarantee must specify the Australian state or territory whose laws govern it. This determines which court has jurisdiction and which state or territory legislation applies to the writing and signature requirements.
Additional compliance elements for a Personal Guarantee (Australia) used in Australia include: Under the Corporations Act 2001 (Cth) and the Australian Securities and Investments Commission Act 1989, ASIC regulates financial products and services. The National Consumer Credit Protection Act 2009 (Cth) governs consumer lending. The Australian Taxation Office (ATO) applies stamp duty through state revenue offices. The Australian Financial Complaints Authority (AFCA) resolves consumer financial disputes. The Reserve Bank of Australia (RBA) sets monetary policy affecting interest rate obligations in financial agreements. Forms-legal.com provides this template as a starting point for Australia-compliant documentation.
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Reference this free template in an article, syllabus, or research note:
Forms Legal. (2026). Personal Guarantee (Australia) (Australia) [Legal document template]. Forms Legal. https://forms-legal.com/australia/financial/agreements/personal-guarantee-australia
"Personal Guarantee (Australia) (Australia)." Forms Legal, 2026, https://forms-legal.com/australia/financial/agreements/personal-guarantee-australia.
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year = {2026},
howpublished = {\url{https://forms-legal.com/australia/financial/agreements/personal-guarantee-australia}},
note = {Free legal document template. Based on National Consumer Credit Protection Act 2009 (Cth)}
}Also available for these jurisdictions:
Frequently Asked Questions
In Australia, a company director is most commonly required to provide a personal guarantee when the company is seeking bank finance or a commercial loan, when the company is entering a commercial lease as a corporate tenant, or when the company is applying for a trade credit account with a supplier. Lenders and creditors require a personal guarantee because a company (as a separate legal entity under the Corporations Act 2001 (Cth)) may have limited assets against which a creditor can recover if the company defaults. A director's personal guarantee gives the creditor direct recourse against the director's personal assets — including their home if it is not otherwise protected. Directors should always seek independent legal advice before signing a personal guarantee, as the consequences of doing so can be severe and long-lasting.
Yes, Australian courts can set aside a personal guarantee in a range of circumstances. The most important ground is unconscionable conduct under section 21 of the Australian Consumer Law (Schedule 2 to the Competition and Consumer Act 2010 (Cth)) or under equitable principles. A guarantee may be set aside where the beneficiary knew or should have known that the guarantor was under a special disadvantage — such as a family relationship with the principal debtor that impaired the guarantor's judgment, a lack of understanding of the document, or financial vulnerability — and the beneficiary took unconscionable advantage of that disadvantage. A guarantee may also be challenged for undue influence (where the guarantor was pressured or unduly influenced by the principal debtor or another person), misrepresentation, or non-disclosure of material facts. For this reason, creditors typically insist that guarantors obtain independent legal advice before signing, and many require a certificate from the guarantor's solicitor confirming that advice was given.
A limited personal guarantee caps the guarantor's liability at a specified maximum dollar amount. For example, a director might agree to personally guarantee the company's obligations up to a maximum of AUD $250,000. An unlimited personal guarantee, by contrast, covers all of the company's obligations to the beneficiary — present and future — without any cap. Unlimited guarantees are particularly common in bank lending, where the lender wants the comfort of knowing that the guarantor is exposed to the full extent of the borrower's liability. From the guarantor's perspective, a limited guarantee is far preferable, as it provides certainty about the maximum personal exposure. Guarantors should always negotiate for a cap where possible. The cap amount is typically negotiated as a proportion of the facility or credit limit, and may be adjusted over time as the underlying arrangement evolves.
The Australian Consumer Law (ACL), contained in Schedule 2 to the Competition and Consumer Act 2010 (Cth), can apply to personal guarantees in two main ways. First, the unfair contract terms provisions in Part 2-3 of the ACL apply to standard form small business contracts. Since October 2024, these provisions apply to contracts with small businesses (defined as businesses with fewer than 100 employees or an annual turnover of less than AUD $10 million). If a personal guarantee is a standard form contract and the guarantor is a small business entity, any term of the guarantee that is unfair within the meaning of the ACL may be void. Second, the unconscionable conduct prohibitions in Part 2-2 of the ACL (sections 20-22) may apply to the circumstances in which the guarantee was obtained. A beneficiary who uses high-pressure tactics, exploits a guarantor's vulnerability, or fails to make adequate disclosure of material information may be found to have engaged in unconscionable conduct, exposing the guarantee to challenge and the beneficiary to pecuniary penalties.
If the principal company (the principal debtor) enters voluntary administration or liquidation under Part 5.3A or Part 5.4B of the Corporations Act 2001 (Cth), the personal guarantee does not automatically come to an end. On the contrary, the company's insolvency is typically a triggering event under which the beneficiary is entitled to make a demand on the guarantor for all outstanding amounts immediately. The guarantor's personal liability continues in full regardless of any moratorium applying to the company's debts during the administration process. The personal guarantee is specifically designed to protect the beneficiary against the company's insolvency — it would be pointless if the beneficiary's ability to call on the guarantee were suspended whenever the company became insolvent. Guarantors should be aware that, upon paying under the guarantee, they acquire a right of subrogation against the company and a right to prove as a creditor in the liquidation for the amounts paid.
This template is provided for informational purposes only and does not constitute legal advice. Laws vary by jurisdiction and change over time. Consult a qualified attorney for advice specific to your situation.Full disclaimer
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