Glossary
Personal guarantee
A personal guaranteeA personal guarantee is a promise by an individual — often a director — to answer for a company's debt if the company does not pay. It must be in writing and signed: Statute of Frauds 1677 s.4. A company signature block does not make the director a guarantor. Use a deed if there is no consideration.More in the glossary is a promise by an individual — often a director — to answer for a company's debt if the company does not pay. It must be in writing and signed: Statute of Frauds 1677 s.4. A company signature block does not make the director a guarantor. Use a deedA deed is a formal written document that meets special signing rules, commonly used where one side gives nothing in return.More in the glossary if there is no considerationConsideration is what each party gives or promises in exchange for the other's promise in a contract.More in the glossary.
Last updated 28 October 2026
Studios ask for these when the client is a new limited company with no accounts. The company stays the counterparty; the human stands behind the invoices. Actionstrength [2003] UKHL 17 is why an oral “I’ll cover it” is worthless. See indemnity vs guarantee. The guarantee is secondary: it bites when the company defaults, not before.
We put it on its own page, signed by the individual in their personal capacityCapacity is the legal power to bind yourself to a contract. Adults of sound mind and companies registered under the Companies Act 2006 have it. A company's own constitution cannot be used to undo a deal it has done: Companies Act 2006 s.39. Minors can still make some contracts; the Minors' Contracts Act 1987 sets the modern rules.More in the glossary. Lex will not hide a guarantee in the company signature block. If the guarantor gets nothing back, use a deed. Name the debts, a cap, and an end date. An all-monies, perpetual guarantee is the document people regret.
Does it have to be in writing?
Yes. Statute of Frauds 1677 s.4. The agreement, or a memorandum of it, must be in writing and signed by the guarantor or their agent. An email that the guarantor has signed can be enough; a chat message and a company block are not. Keep the signed page with the executed version.
Is a director automatically on the hook?
No. Limited liability is the point of the company. A director who signs “for and on behalf of X Ltd” binds the company, not themselves. Capacity of the company is a different question. If you want the human, they sign a second block: “signed as guarantor”.
Should it be a deed?
Use a deed if the guarantor is not getting consideration — for example they already own the company and the guarantee is a one-way comfort. A deed also gives the twelve-year limitation period. A simple signed guarantee with consideration (the supplier agreeing to contract with the company) can stay a simple contract.
What should it cover?
Named invoices or a named contract, a money cap, and an end date after the last payment is due. Say whether it covers interest and costs. A continuing all-monies guarantee of “all present and future debts” is what a later director tries to walk away from, and what a later lawyer attacks.
A worked example
A new company books a £15,000 film. The studio’s paper is with the company. The director also signs a one-page guarantee: they will pay if the company does not, capped at £15,000 plus statutory interest, ending six months after the final invoice. They sign “as guarantor,” not in the company block. The guarantee is in writing, so s.4 is met. When the company later stalls, the studio can chase the director on that page.
How it shows up in a contract
Sample wording · our own drafting
In consideration of the Supplier entering into the Contract with the Company, the Guarantor irrevocably guarantees the due payment of the Fees. This is a guarantee, not an indemnity. It is limited to £[cap] and ends on [date]. The Guarantor signs in a personal capacity. A signature on behalf of the Company is not a guarantee.
In Plain English
Because we are willing to contract with the company, you personally promise to pay the fees if the company does not. This is a guarantee, not an indemnity. It has a cap and an end date. You are signing as you, not as the company.
Common mistakes
- Treating the director’s company signature as a guarantee.
- Relying on an oral promise — Statute of Frauds 1677 s.4 kills it.
- Taking an all-monies, perpetual guarantee when you only needed this job’s fee.
- Forgetting a deed where the guarantor received no consideration.
What the legislation says
No action may be brought whereby to charge the defendant upon any special promise to answer for the debt, default or miscarriage of another person, unless the agreement or some memorandum or note of it is in writing and signed by the party to be charged or an authorised agent.
Source: Statute of Frauds 1677, s.4Checked 3 November 2026Pending lawyer review
Sources
- Statute of Frauds 1677, s.4Checked 3 November 2026Pending lawyer review
Frequently asked questions
What is a personal guarantee?
A promise by an individual to answer for a company’s debt if the company does not pay. It must be in writing and signed: Statute of Frauds 1677 s.4.
Does it have to be in writing?
Yes. An oral guarantee is not enforceable (Actionstrength [2003] UKHL 17). Sign a separate page in a personal capacity.
Is a director automatically on the hook?
No. Signing for the company binds the company. A personal guarantee needs its own signature. See /glossary/capacity.
Should it be a deed?
Use a deed if the guarantor gets no consideration, or if you want the twelve-year limitation periodThe limitation period is the time you have to start a claim. Under the Limitation Act 1980, an action on a simple contract is six years from when the cause of action accrued; an action on a deed is twelve years. The clock usually starts on breach, not on discovery. A standstill agreement can pause it if both sides sign.More in the glossary. See /glossary/deed and /glossary/limitation-period.
Related
The legal wording governsLast reviewed 28 October 2026Pending lawyer review