Personal Guarantees, Fee Agreements and Letters of Intent

Close-up of the hands of two businesswomen shaking hands with two businessmen in background
In our last RealDealDocs blog entry, we discussed lease addendums, aircraft lease agreements, and talent agreements. This week, we will cover three other types of agreements: personal guarantees, fee agreements, and letters of intent.

To review, an agreement can be defined as “a negotiated and usually legally enforceable understanding between two or more legally competent parties. Although a binding contract can (and often does) result from an agreement, an agreement typically documents the give-and-take of a negotiated settlement and a contract specifies the minimum acceptable standard of performance.”


Personal Guarantee

A personal guarantee is an agreement regarding debts owed. It is used by borrowers to show lenders they intend to pay their company’s debts personally. A lender may require a personal guarantee before issuing any needed funds so they can ensure they’ll receive payment, either from the owner of a company or a member of management. Historically letters of intent have been used for travel or Visa requirements, to assure a government agency that the traveler is financially secure. But this document is most commonly used to secure a loan, either by a bank or other lender who can provide financing. By issuing a letter of guarantee, the guarantor is promising to take responsibility if the borrower forfeits a contract, a loan, or any other deal. In the event a loan can’t be repaid, the agreement often grants the lender a chance to seize the assets of the individual who signs the guarantee. A personal guarantee is legally binding and susceptible to court action if not fulfilled.


Fee Agreement

A fee agreement is a contract used by attorneys and other professionals to establish the price for services rendered for their clients. An agreement may stipulate a flat fee, a fee paid hourly, or a fee contingent on certain conditions. The document often includes an anticipated timetable for the professional’s delivery of services or work to the client. A flat fee agreement will stipulate whether the total fee is paid up front or by installment payments. If the agreement is for an hourly fee, the agreement may address the rate and billing increments. Contingency fee agreements outline conditions that must be met in order for the professional to receive payment.
The agreement may contain clauses regarding how possible expenses and costs will be billed. A professional or lawyer’s incurred expenses may include travel, mileage, materials, filing fees and other charges. The document helps both parties understand each side’s expectations and reduces the chance of arguments over monetary issues once the product or service is delivered.


Letter Of Intent

A letter of intent is a notice to make parties aware of an impending action and the terms regarding the action. The document may be used in several situations, such as a notice detailing a corporation’s plan to purchase or acquire a product or company. A company may issue such a document if they plan to offer public stock options, restructure their organization, merge with another firm or engage in any other course of action that may take place during the lifetime of a business. These documents are often created with the collaboration of upper level management and legal representatives, then disseminated throughout the other levels of an organization. A letter of intent can be used during sessions of negotiation and it demonstrates that a party fully intends on making a business decision. In the family court system, a letter of intent describes the wishes and expectations a parent has for their offspring, should the parent pass away. This document may be used by the court to determine placement of children.



Drafting an agreement from scratch can be a time consuming and daunting task – plus, without input from a qualified attorney, you may be poised to enter into an arrangement this not legally sound or in your best interest. Fortunately, RealDealDocs allows you access to thousands of agreements that have already been used in a myriad of different industries.