A Guarantee & Security Agreement provides collateral and personal guarantees securing performance or payment obligations. This playbook details drafting considerations for enforcement rights, perfection, and priority of security interests.
Why This Matters: Unfamiliar or biased jurisdictions can increase enforcement risk and legal costs. A balanced forum clause ensures predictability in dispute outcomes.
Negotiation strategy
If you're the Lender:
Negotiate for a neutral jurisdiction that aligns with your business operations. Consider arbitration to avoid lengthy court processes.
If you're the Borrower:
Ensure the jurisdiction is familiar and favorable to your interests. Advocate for court litigation if it provides strategic advantages.
Essential elements
1
Governing Law
Specifies applicable legal framework.
2
Dispute Resolution
Mechanism for resolving conflicts.
3
Waiver of Jury Trial
Streamlines legal proceedings.
Action framework
ACCEPT
Propose edits if the jurisdiction is unfamiliar or unfavorable.
EDIT
Reject if the clause imposes undue legal risks.
ADD
Add if the clause is missing or ambiguous.
PRO TIP
Always verify the neutrality and familiarity of the chosen jurisdiction.
Example clauses
FAVORABLE
Preferred Clause
"This Agreement shall be governed by the laws of [Neutral Common Law Jurisdiction]. Any disputes arising under this Agreement shall be resolved through arbitration in [Jurisdiction], with a waiver of jury trial."
NEUTRAL
Fallback Clause
"This Agreement shall be governed by the laws of [Alternative Common Law Jurisdiction]. Disputes shall be resolved in the courts of [Jurisdiction], with a waiver of jury trial."
UNFAVORABLE
Biased Jurisdiction Clause
"This Agreement shall be governed by the laws of [Biased Jurisdiction], with disputes resolved exclusively in its courts."
Fallbacks
High-Risk Projects
In high-risk projects, prioritize jurisdictions with robust legal frameworks to mitigate potential disputes.
Cross-Border Transactions
For cross-border deals, select a jurisdiction that is neutral and recognized internationally to avoid enforcement issues.
Long-Term Contracts
In long-term agreements, ensure the jurisdiction remains favorable over time to prevent future legal complications.
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DocJuris is not a law firm or a substitute for an attorney or law firm. We cannot provide any kind of advice, explanation, opinion, or recommendation about possible legal rights, remedies, defenses, options,selection of forms or strategies.