Parent Company Guarantee Law and Legal Definition

Parent company guarantee is a guarantee of performance required by a client from a parent company when a subsidiary company or a contractor is entering into a contract with the client. A guarantee document is drafted from the parent company’s perspective. It will be clear from the document that the parent company’s liability only arises if its subsidiary commits a breach of its contract and fails to rectify the breach. The liability of the parent company towards a client will not be greater than the subsidiary company.