Personal Guarantee in the UAE

A personal guarantee is the legal promise to pay an amount of debt by for which that person will be held responsible in the event they are unable to pay the amount.

Implementation of Shariah law has lead to UAE Laws on personal guarantee being amended and as per Article 1068 as follows,

  • A guarantee given by a guarantor compels him or her to meet their obligation to the guaranteed person on time and, if failing to do so can incur a fine issued by a competent judge.
  • In case of a penal sentence (jail term) being issued in relation to failure to meet a personal guarantee, the guarantor may be compelled to pay a specified amount in addition.

The increase in trade due to the strong economic growth in the UAE has resulted in a higher number of transactions which require quick debt collection method to be adapted.

The most common mode used by institutions and traders is the post-dated or undated cheque which is fast and safe as compared to other methods.

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