Payment Guarantee Letter: Is It Legally Valid
A letter of guarantee does not create a new guarantee, but confirms the debt - and this is useful to the lender. We understand what it gives, what to write in it and how it is dangerous to the debtor.
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A payment guarantee letter is a letter in which the debtor acknowledges the debt and promises to repay it by a certain date. It is requested by suppliers before the next shipment or instead of immediately going to court.
What is it in terms of the law?
The Civil Code does not know such a document. With an independent guarantee, it has only a common name: the guarantee is issued by a third party – a bank or other organization – to secure someone else’s obligation. Here the debtor writes about his own debt.
The letter does not create a new obligation: the buyer is obliged to pay without it - under the contract. But it has three practical implications.
- Recognition of duty. The letter is proof that the debtor does not dispute either the fact of delivery or the amount. In court, this removes most of the objections.
- The statute of limitations begins to flow again. Recognition of debt interrupts the three-year term (Article 203 of the Civil Code). If the time limit has already expired, written recognition triggers it anew (Article 206 § 2).
- The new payment date is only with the consent of the creditor. A one-sided letter does not change the term under the contract: the penalty continues to accrue from the original date, if the supplier did not expressly agree to the postponement.
What to write
- Addressee and sender: Names, TIN.
- The basis of the debt: contract, invoices, invoices or UPD with numbers and dates.
- Amount of debt Numbers and letters, with or without VAT.
- Term of payment: A specific date or schedule with dates and amounts. “In the near future” and “as funds come in” is not a deadline.
- Requisites payer.
- Signed Director or representative by power of attorney, date and number of the letter.
The text will collect the form [tool:guarantee-letter].
Who should sign
A manager or person with a power of attorney in which there is a right to recognize a duty. A letter signed by a manager or accountant without authority may not be considered by the court as a recognition of a debt - and the statute of limitations will not be terminated.
How the letter is useful to the creditor
- Fixes the amount: it is difficult to argue about it later.
- Extends recovery time.
- Shows the good faith of the supplier, if the case goes to court: he gave the debtor time.
How it is dangerous for the debtor
By signing the letter, the company loses objections that the goods were not received or received for another amount. If there are disagreements with the debt - underdelivery, marriage, credit - first it is worth checking the calculations (The act of reconciliation of mutual settlements: how to make and what to do in case of discrepancies) and recognizing only the indisputable part.
If the payment never arrived
The letter of guarantee does not replace the claim. The same procedure: claim, waiting period, claim. The letter is attached to the claim and the claim as evidence. How to make a claim - in the article Pre-trial claim for payment: term, procedure and what to write in it.
Frequent questions
Is it possible to refuse shipment on a guarantee letter if the deadline has passed?
The right to suspend delivery is a contract and a law, not a letter. But a broken promise is a weighty argument for transferring the buyer to prepayment.
Do I need a seal?
The law doesn't require it. Signature of the authorized person is important.
Is a letter of guarantee sent by e-mail?
Yes, if the contract recognizes electronic correspondence or it can be proved that the letter was sent by the authorized representative of the debtor. It is more reliable to get the original or document with an electronic signature.
Can the guarantee letter change the term of payment under the contract?
Only if the creditor agrees: a response letter or an additional agreement.
