Does a personal guarantee given in an Alberta business sale need a lawyer’s acknowledgment?

A personal guarantee can appear in a business sale, for example when an individual backs a corporate buyer’s promise to pay. In Alberta, a separate statute sets formalities for guarantees given by people rather than corporations. This page covers Alberta only. It describes what the Act says and does not decide whether your guarantee is caught by it. For the wider list of terms a purchase agreement can carry, see what should be in a business purchase agreement.

What the Act requires

Section 3 of Alberta’s Guarantees Acknowledgment Act says no guarantee has any effect unless the person entering into the obligation appears before a lawyer, acknowledges to the lawyer that the person executed the guarantee, and signs the certificate in the lawyer’s presence. Under section 4, the lawyer must first be satisfied, by examining that person, that they are aware of the contents of the guarantee and understand it. The certificate must be attached to or noted on the instrument containing the guarantee it relates to.

What counts as a guarantee

The Act defines a guarantee as a deed or written agreement by which a person, not being a corporation, takes on an obligation to answer for another’s act, default or omission. The definition leaves out, among other things, a bill of exchange, cheque or promissory note, a partnership agreement, and a guarantee given on the sale of an interest in land or an interest in goods or chattels. Whether a given guarantee in a business sale falls inside or outside that definition is a question to put to your Alberta lawyer.

Video, evidence and e-signatures

Despite section 3, section 3.1 allows the person to appear before the lawyer by two-way video conferencing, acknowledge execution, and be seen by the lawyer signing the certificate. The Forms Regulation says Form 2 may be used instead of Form 1 when the certificate is executed that way. Under section 5, a certificate that is substantially complete and regular on its face, and accepted in good faith by the person to whom the obligation was incurred without reason to believe the Act was not complied with, is conclusive proof of compliance.

Alberta’s Electronic Transactions Act, section 7(1)(f), says that Act does not apply to guarantees under the Guarantees Acknowledgment Act. Do not assume its electronic-signature rules cover such a guarantee; ask the lawyer how the acknowledgment and signing will be done.