What is a personal guarantee in Scotland?
It is an individual's promise, frequently a company director's, to settle a company's debts should the company not pay them. The individual's personal assets are therefore exposed.
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Guarantee (Scotland)
Under a guarantee, one person (the guarantor) promises a creditor that a third party will meet its payment or performance obligations, and undertakes to do so itself if that party does not. Directors' personal guarantees and guarantees from a parent company are both common. A guarantee has to be in writing and is normally coupled with an indemnity.
When you need one
You need one where a landlord, lender or supplier will only deal with a business once a director or parent company provides security. The same is true if you have been asked to provide a guarantee and need to understand it.
What it should contain
Guaranteed obligations
Precisely what the guarantor will be liable for.
Guarantee and indemnity
An undertaking to pay if the debtor fails to, plus an indemnity in case the debt cannot be enforced.
Maximum liability
Any cap on the guarantor's exposure.
Duration
Continuing, or ending on a fixed date.
Protective provisions
Making sure the guarantee survives if the debtor is allowed time or the terms are changed.
Independent advice
An acknowledgment from guarantors who are individuals.
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 guarantor signing with no independent legal advice.
- Giving a guarantee of "all liabilities" with no cap and no clear scope.
- Varying the main contract in a way that results in the guarantor being released.
Look at a specimen guarantee: a concise example of the structure and main clauses, in the format the app produces.
Quick answers
Can a guarantor limit their liability in Scotland?
Yes. They can negotiate a cap, a fixed expiry date or a tight definition of the guaranteed obligations.
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.