When it comes to business transactions, contracts are an essential tool in ensuring the smooth and successful completion of deals. One such document is the Authorised Guarantee Agreement (AGA), which is commonly used in commercial leasing arrangements.
An AGA is a legal agreement that serves as a guarantee from a former tenant to a landlord that the obligations outlined in the original lease agreement will be met by a new tenant. In other words, it is a legal contract that ensures that the new tenant will take up the responsibilities of the previous tenant when it comes to the terms outlined in the original lease agreement.
There are different forms of AGAs, and it is important to understand the different types to ensure that the right agreement is used in a given situation. Below are some of the most common forms of AGAs.
1. Direct AGA
The Direct AGA is the most common type of AGA. It is used in situations where the outgoing tenant guarantees the performance of the incoming tenant. This means that if the new tenant fails to meet their obligations, the outgoing tenant will be liable for any damages.
2. Intermediate AGA
The Intermediate AGA is used in situations where there have been changes in the leasehold ownership. This occurs when the original tenant sells their leasehold interests to another party. In this case, the AGA is used to ensure that the new tenant will meet the obligations outlined in the original lease agreement.
The Sub-AGA is used in situations where an outgoing tenant has assigned their leasehold interest to a new tenant. In this case, the AGA is used to ensure that the new tenant will meet the obligations outlined in the original lease agreement. Unlike the Direct AGA, the outgoing tenant`s liability is limited to the assigned leasehold interest.
4. Statutory AGA
The Statutory AGA is a type of AGA that is required by law in certain situations. For instance, when the landlord is selling the leased property, the outgoing tenant is required to enter into a Statutory AGA with the new owner. The purpose of this agreement is to ensure that the new owner has the same rights and obligations as the previous owner.
In conclusion, AGAs are an important tool in commercial leasing arrangements. It ensures that all parties involved are held accountable for the obligations outlined in the original lease agreement. Understanding the different forms of AGAs is vital in ensuring that the right agreement is used in the appropriate situation.