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Dear Client, thank you for your query. Could you please clarify what type of agreement the supplier wants you to sign? Is it a personal guarantee agreement? Are you signing it as a company or as an individual?
Do I understand correctly that you are a director of the company that buys cars from this supplier?
This is quite usual for creditors to request company directors to give a personal guarantee. The same would happen if, for example, you approached a bank for a loan or overdraft facility. The reason for this is that, if the company cannot pay its debts (received cars but not able to pay the supplier’s invoice), the shareholders of this limited company are only obliged to cover the amount that constitutes the unpaid part of their shares, if any, and this amount is usually either £0 or very small. So, the creditors (in your case the car supplier), to protect themselves, require directors to personally guarantee that the company’s debt will be paid from directors’ personal assets, if the company itself cannot cover its debt or pay the supplier’s invoice. Pease estimate carefully if you are happy to pay the company’s debt from your personal money. If yes, you can sign the Guarantee & Indemnity agreement.
Hope this helps.