What is a personal guarantee?
A promise by an individual — often a company director — to pay a company's debts if the company does not. It puts the individual's own assets at risk.
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Guarantee (Scotland)
A guarantee is a promise by one person — the guarantor — to a creditor that another person will pay or perform, and that the guarantor will do so if they don't. Personal guarantees by directors and parent-company guarantees are common. A guarantee must be in writing, and is usually combined with an indemnity.
When you need one
Use one when a landlord, lender or supplier asks for security from a director or parent company before dealing with a business — or when you are asked to give one and want to understand it.
What it should contain
Guaranteed obligations
Exactly what the guarantor is answerable for.
Guarantee and indemnity
The promise to pay if the debtor doesn't, and an indemnity if the debt is unenforceable.
Maximum liability
Any cap on the guarantor's exposure.
Duration
A continuing guarantee or a fixed end date.
Protective provisions
Keeping the guarantee alive despite time or changes given to the debtor.
Independent advice
An acknowledgment for individual guarantors.
Points specific to Scotland
- In Scotland a guarantee is a cautionary obligation. There is no deed; a guarantee given other than in the course of business must be in writing under the Requirements of Writing (Scotland) Act 1995, and signing before a witness makes it self-proving. Following Smith v Bank of Scotland, a creditor should advise an individual guarantor to take independent advice.
Different rules can apply elsewhere in the UK: see the England and Wales version of this guide.
Common mistakes
- An individual signing without independent legal advice.
- Guaranteeing "all liabilities" without a cap or clear scope.
- Changing the underlying contract in a way that releases the guarantor.
See a specimen guarantee — a short illustration of the structure and key clauses, laid out as the app produces them.
Quick answers
Can a guarantor limit their liability?
Yes, by negotiating a cap, a fixed end date or a narrow definition of the obligations guaranteed.
Draft your guarantee now
Be Contract Wise (Scotland)'s powerful, carefully prepared drafting tools turn a short set of plain-English questions into a guarantee under Scots law, laid out to a professional standard, with an explanation of every clause. Simple or complex, export to Word or PDF.
Start drafting — freeBrowse all guidesReviewed 2026-09-24. General legal information about Scots law, not legal advice.