An agreement by which a party (the guarantor) assumes the responsibility for the payment or performance of an obligation or action of another person (the primary obligor) if that other person defaults. A guarantee creates a secondary obligation to support the primary obligor's primary obligation to a third party. The beneficiary of the guarantee will only have an action against the guarantor if there has been a default by the primary obligor.

In all states other than New South Wales, South Australia and the Australian Capital Territory, a contract of guarantee must be in writing (or evidenced in writing) and signed by the guarantor or a person authorised by the guarantor under:

In New South Wales, South Australia and the Australian Capital Territory, a guarantee need not be in writing to be enforceable.

For more information, see Practice note, Guarantees and indemnities.