Omnibus Guarantee and Set-Off Agreement Meaning

Omnibus Guarantee and Set-Off Agreement Meaning: Understanding the Legal Jargon

As a professional, I have come across many legal terms and jargon that can be confusing to those who are not familiar with them. One such term is the Omnibus Guarantee and Set-Off Agreement.

In simple terms, an Omnibus Guarantee and Set-Off Agreement is a legal document that allows a lender to apply any funds it owes to a borrower against the borrower`s outstanding debt. This means that if a borrower owes money to a lender and has money coming in from another source, the lender can take that money and use it to pay off the borrower`s debt.

This type of agreement is commonly used in commercial lending, where a borrower may have multiple loans with the same lender. The agreement allows the lender to set off any funds owed to the borrower against the outstanding debt on any of those loans.

The Omnibus Guarantee and Set-Off Agreement also includes a guarantee from the borrower to the lender. This guarantee ensures that the borrower will repay all outstanding debts owed to the lender. If the borrower is unable to pay, the guarantor (usually a third party) will step in and pay the debt on behalf of the borrower.

It is important to note that the Omnibus Guarantee and Set-Off Agreement is a legally binding document. Both parties should seek legal advice before signing the agreement to ensure that they understand their rights and responsibilities.

In summary, the Omnibus Guarantee and Set-Off Agreement is a legal document that allows a lender to apply funds owed to a borrower against their outstanding debt. This type of agreement is commonly used in commercial lending and includes a guarantee from the borrower and a third-party guarantor. It is important to seek legal advice before signing the agreement to fully understand its implications.