This practice note examines legal and drafting points relating to guarantees and indemnities where the obligations of a third party are guaranteed or indemnified (or both).

The note considers the legal distinctions between guarantees (as secondary obligations) and indemnities, performance bonds and similar instruments (as primary obligations), and provides an overview of the contractual issues (such as the Statute of Frauds and capacity) and legal issues (such as undue influence, duress and the role of directors) which relate to guarantees. It links to our precedent guarantees and indemnities and also to our content on performance bonds, payment guarantees and comfort letters.