# I Signed a Personal Guarantee: What Am I Actually Liable For?

> A personal guarantee makes you pay another person's or company's debt if they default, but only as far as the guarantee contract's wording says: your liability is generally 'coterminous' (matched exactly) with the borrower's debt. In Ontario, guarantees must be in writing. In Alberta, an individual guarantor's guarantee is not effective until a lawyer certifies you understood it.

Published 2026-08-18 · Last reviewed 2026-08-14 · [Canonical page](https://canadalegalcenter.ca/articles/i-signed-a-personal-guarantee-what-am-i-actually-on-the-hook-for/)

Legal information, not legal advice.

## What you're actually promising when you sign

A personal guarantee is a contract in which you, the guarantor, promise to pay someone else's debt if they don't. This is federal common law and applies the same way in Ontario, Alberta, and every other province. The Supreme Court of Canada has described it precisely: your liability as guarantor is generally "coterminous," meaning matched exactly, with the liability of the principal debtor (the person or business whose debt you're backing), as set by the wording of the guarantee itself. If the underlying debt turns out to be void or unenforceable, your guarantee is too, according to [Communities Economic Development Fund v Canadian Pickles Corp](https://www.canlii.org/en/ca/scc/doc/1991/1991canlii48/1991canlii48.html).

That same case draws a line worth knowing before you sign anything: a guarantee is not the same as an indemnity. An indemnifier takes on a primary obligation to pay no matter what happens to the borrower's liability. A guarantor's obligation, by contrast, only exists because the borrower is liable in the first place, and only kicks in once the borrower has actually defaulted. As the Court put it in [Gold v Rosenberg](https://www.canlii.org/en/ca/scc/doc/1997/1997canlii333/1997canlii333.html), "a guarantee is a contract whose performance is contingent on the default of the principal debtor." Read the document you signed carefully: if it's drafted as an indemnity rather than a guarantee, the protections discussed below may not apply the same way.

## How much you actually owe

Courts read an unpaid, "accommodation" guarantor's obligations narrowly. In [Manulife Bank of Canada v Conlin](https://www.canlii.org/en/ca/scc/doc/1996/1996canlii182/1996canlii182.html), the Supreme Court confirmed that the law protects this kind of guarantor "by strictly construing their obligations and limiting them to the precise terms of the contract of surety." Nothing broader than what the contract says can be read into your obligation.

But "the precise terms" can still be wide. A **continuing guarantee**, common in commercial lending, typically has no end date and no dollar ceiling: it can cover all future borrowing by the debtor, not just the loan on the table when you signed. In Ontario, the Court of Appeal has confirmed that this kind of guarantee usually runs indefinitely, and the guarantor's exposure to *new* debt only stops once proper notice of cancellation is given, at which point liability freezes at whatever is owed at the end of the notice period ([Intercap Equity Inc v Bellman](https://www.canlii.org/en/on/onca/doc/2022/2022onca61/2022onca61.html)). Continuing guarantees are also commonly drafted to let the lender renew, extend, or change the loan's terms without asking you, and without releasing you from liability, as long as the guarantee's wording covers this.

There is one check on the creditor's side. If the lender holds security (collateral) for the guaranteed debt, it has a duty to look after that security and be able to hand it back, or reassign it, once the debt is repaid. Failing that duty can reduce or wipe out a guarantor's exposure, per [Bauer v Bank of Montreal](https://www.canlii.org/en/ca/scc/doc/1980/1980canlii12/1980canlii12.html).

## Ontario: it must be in writing, and liability can be joint and several

In Ontario, a guarantee (the Statute of Frauds calls it "any special promise to answer for the debt, default or miscarriage of any other person") must be evidenced in writing and signed to be enforceable, under [section 4 of Ontario's Statute of Frauds](https://www.canlii.org/en/on/onca/doc/2009/2009onca709/2009onca709.html). A verbal promise to backstop someone's loan is not enforceable in Ontario.

Ontario courts also enforce guarantees on a joint-and-several basis: the guarantor can be on the hook for the full amount alongside the corporate borrower, not just a share of it. In [Toronto-Dominion Bank v Readymix Foods Corporation](https://www.canlii.org/en/on/onca/doc/2026/2026onca423/2026onca423.html), the individual guarantor was found jointly and severally liable, together with the corporate borrower, for the full $60,036.89 owed to the bank.

## Alberta: your guarantee isn't effective until a lawyer certifies it

Alberta has a protection Ontario does not. Under Alberta's [Guarantees Acknowledgment Act](https://www.canlii.org/t/829b), before a guarantee signed by an individual (not a corporation) is legally effective, that person must appear before a lawyer, who has to confirm they understand the guarantee, then issue a certificate attached to the document. The Act's purpose is explicit: to stop an ordinary person from being bound by liabilities under a guarantee they didn't understand when they signed it, according to the [Government of Alberta's summary](https://open.alberta.ca/publications/g11) of the Act.

This requirement doesn't catch everything. It applies only to guarantees signed by individuals, and it specifically excludes some instruments, including bills of exchange, cheques, promissory notes, and guarantees given on the sale of land or goods. If you signed one of those instead, this certification step doesn't apply. The Act applies to guarantees entered into on or after September 1, 1969, so any guarantee you'd sign in Alberta today is covered.

## Guaranteeing someone's debt can affect your own credit

If you're in Alberta, guidance from the [Centre for Public Legal Education Alberta](https://www.cplea.ca/wp-content/uploads/BeingAGuarantor.pdf) notes that a guaranteed loan can appear on your own credit report if the lender reports it, "just like any other account for which you are liable." If the borrower defaults and you don't pay, that shows up against your own credit history, separate from whatever collection action the lender takes against the borrower directly.

## Frequently asked questions

**Is a personal guarantee the same thing as a personal indemnity?**

No, and the difference matters everywhere in Canada. Under a guarantee, your obligation only exists if the principal debtor (the person or company that owes the original debt) is actually liable; if the underlying debt is void, so is your guarantee, per the Supreme Court's ruling in Communities Economic Development Fund v Canadian Pickles Corp. Under an indemnity, you have a standalone promise to pay regardless of the borrower's liability.

**Can I get out of a continuing guarantee before the loan is paid off?**

In Ontario, a continuing guarantee (one with no end date, covering all future borrowing) typically lets you give notice of cancellation; once given, your liability freezes at whatever balance is outstanding at the end of the notice period, per Intercap Equity Inc v Bellman, 2022 ONCA 61. Whether the same cancellation right exists in Alberta was not verified here and should be checked against the specific guarantee wording.

**Do I need a lawyer to sign a personal guarantee in Alberta?**

If you are an individual (not a corporation) guaranteeing someone else's debt in Alberta, yes: under the Guarantees Acknowledgment Act, a lawyer must confirm you understood the guarantee and issue a certificate before it takes effect. This requirement does not apply in Ontario.

**Will signing a personal guarantee show up on my credit report?**

In Alberta, guidance from the Centre for Public Legal Education Alberta notes that if the lender reports the guarantee, it can appear on your credit report like any other account you're liable for, and non-payment by the borrower can hurt your own credit score.


## Sources

1. [Communities Economic Development Fund v Canadian Pickles Corp](https://www.canlii.org/en/ca/scc/doc/1991/1991canlii48/1991canlii48.html), 1991 CanLII 48 (SCC), [1991] 3 SCR 388
2. [Gold v Rosenberg](https://www.canlii.org/en/ca/scc/doc/1997/1997canlii333/1997canlii333.html), 1997 CanLII 333 (SCC), [1997] 3 SCR 767
3. [Manulife Bank of Canada v Conlin](https://www.canlii.org/en/ca/scc/doc/1996/1996canlii182/1996canlii182.html), 1996 CanLII 182 (SCC), [1996] 3 SCR 415
4. [Bauer v Bank of Montreal](https://www.canlii.org/en/ca/scc/doc/1980/1980canlii12/1980canlii12.html), 1980 CanLII 12 (SCC), [1980] 2 SCR 102
5. [Intercap Equity Inc v Bellman](https://www.canlii.org/en/on/onca/doc/2022/2022onca61/2022onca61.html), 2022 ONCA 61
6. [Statute of Frauds (as quoted in Erie Sand and Gravel Limited v Tri-B Acres Inc)](https://www.canlii.org/en/on/onca/doc/2009/2009onca709/2009onca709.html), RSO 1990, c S.19, s 4
7. [Toronto-Dominion Bank v Readymix Foods Corporation](https://www.canlii.org/en/on/onca/doc/2026/2026onca423/2026onca423.html), 2026 ONCA 423
8. [Guarantees Acknowledgment Act](https://www.canlii.org/t/829b), RSA 2000, c G-11, s 1(a), 2, 4(1)
9. [Guarantees Acknowledgment Act (King's Printer version)](https://kings-printer.alberta.ca/documents/Acts/G11.pdf), RSA 2000, c G-11, s 2
10. [Government of Alberta, Open Government summary of the Guarantees Acknowledgment Act](https://open.alberta.ca/publications/g11) (retrieved 2026-07-17)
11. [Centre for Public Legal Education Alberta, Being A Guarantor](https://www.cplea.ca/wp-content/uploads/BeingAGuarantor.pdf) (retrieved 2026-07-17)