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Guarantee is a written promise made by one person to be collaterally answerable for the debt,
default, or miscarriage of another.
Care must be exercised before accepting the guarantee of a limited company. the following should be noted before accepting a guarantee of a limited company:
(i) The memorandum of association must contain a special power to execute
guarantees. If no specific power exists, any guarantee executed will be ultra vires
the company thus unenforceable.
(ii) The articles of association stipulate the manner in which the guarantee may be
executed, i.e. either: (i) under hand of a dully authorized official(s) by the
resolution of the board of directors, or (ii) under seal of the company.
NatalieR answered the question on February 22, 2022 at 08:58
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