This parent company guarantee is for use where a company entering into a contract is required by its client to provide a guarantee of its performance from its parent company.
The guarantee covers
- notice of liability
- notices between parties
- third party rights
- governing law
While fairly balanced, this document is drafted from the parent company’s perspective and the wording makes it clear that the parent company’s liability only arises if its subsidiary commits a breach of its contract and fails to rectify the breach.
The liability of the parent is limited so that it will be no greater than that of the subsidiary under its contract with the client.
You can use this document if you are a company acting as guarantor for a subsidiary’s contracts, and want clarity on the terms of your guarantee agreement.