Various commercial transactions – such as loans, leases, or international contracts – may entail the use of an arrangement known as a “deed of guarantee and indemnity”. 

As the name indicates, this legal document combines two key elements. However, it involves three parties. 

The principle behind this arrangement is that one party (the guarantor) promises to answer for the obligations of another party (the debtor) to reimburse losses suffered by a third party (the beneficiary) in the event of the debtor defaulting. 

This kind of agreement, then, is commonly used to secure loans, commercial contracts, and joint venture liabilities. 

So, to be clear, the aforementioned two elements are: 

• The guarantee, whereby the guarantor promises to ensure the debtor meets their obligations, such as repaying a loan or fulfilling a contract. Any failure by the debtor to perform in accordance with the agreement will leave the guarantor liable to step in and satisfy those obligations. 
• The indemnity, which is an obligation to compensate the beneficiary for any losses incurred as a result of the debtor failing to meet their obligations. A broader agreement than a guarantee, this element of the deed document may cover losses beyond just the debtor’s default. 

Another critical aspect of this type of agreement is that it is typically executed as a deed, which is a formal, written document that is legally binding even without consideration. As a deed, it needs to be signed, witnessed, and delivered in compliance with UK legal requirements. 

The deed will specify the extent of the guarantor’s liability. It may be the case for a given deed of guarantee and indemnity that the guarantor’s liability will be unlimited, or they may only be liable for a certain fixed amount. 

In what circumstances might a UK process agent become necessary? 

A process agent is an appointed representative in a particular jurisdiction (such as, in the case of London Registrars’ own process agency services, the UK) that is authorised to accept legal documents or notices on a given party’s behalf. 

The appointment of a process agent can therefore allow for any necessary legal proceedings to be served efficiently and smoothly, in the (hopefully unlikely) event of a dispute between the parties to a deed of guarantee and indemnity. 

It isn’t automatically the case that for any deed of guarantee and indemnity, a UK-based process agent will need to be appointed. For example, such a move will usually be unnecessary if all parties (the guarantor, debtor, and beneficiary) are based in the UK and each of them have a registered office or an address for service in the UK. 

Alternatively, the guarantor or debtor may be based outside of the UK and might not have a registered office or physical presence in the UK, and the agreement may be governed by English law or subject to English courts’ jurisdiction. 

If this describes the situation for a deed of guarantee and indemnity that you are looking to enter, it is much more likely that the services of a UK process agent will be required – for both the debtor and the guarantor. In this situation the process agent acting for the debtor may be the same process agent as the process agent acting for the guarantor, but each of these would need to sign a separate process agency agreement. It is equally possible that the debtor and the guarantor may each appoint a separate process agent within this same deal.

After all, the deed of guarantee and indemnity exists in the first place as a form of protection for the beneficiary. So, it should be no great surprise to anyone if a UK-based beneficiary insists on both debtor and guarantor appointing a UK process agent as part of the contract. 

Whether you are the debtor or a guarantor, if you’ve been asked to appoint a UK process agent, what’s next? 

To learn more about our own process agent service here at London Registrars, please feel free to visit the relevant section of our website and to download our brochure. 

You are also welcome to get in touch with us directly with any queries you may have, before you commit to our process agency services.