I've been asked to provide an 'all-accounts' guarantee

An all-account guarantee is a broad guarantee that you, or the prospective guarantor will pay all money owing from the borrower to the lender. Crucially, an “all-accounts” guarantee is not limited to the original loan, but can include: 

• Further loans
• Overdraft fees
• Chattel leases
• Any other money owing, even after the guarantee is signed.

You should try, whenever possible, to limit your guarantee to the original loan amount. In that case, the lender may require an “all accounts” guarantee or refuse to loan the money to the debtor/borrower. Of course, when attempting to limit the guarantee, you should be aware that the lender may simply refuse to accept the guarantee. From the lender’s point of view, a limited guarantee diminishes the value of the security for the loan and creates greater risk to be borne by the lender.

That said, you are protected by the fact that the guarantee will only be enforceable in relation to future loan agreements, if the lender has provided you with a copy of the loan agreement. In order to ‘extend’ the guarantee, you must then approve the extension of the guarantee in writing.

If you have further questions, please contact us at frank@franklaw.com.au.

This is not legal advice.