Clifford Chance

New law introducing a professional payment guarantee under Luxembourg law

14 July 2020

The Law on professional payment guarantees dated 10 July 2020 (the ''PPG Law'') creates a new type of guarantee under Luxembourg law, in addition to existing instruments, such as accessory guarantees (cautionnements)  and  autonomous   guarantees (guaranties autonomes). The new framework is intended to provide the parties with greater  contractual  freedom, while preserving legal certainty and protecting against re-characterisation. Parties must expressly agree that their guarantee instrument is subject to the PPG Law for the regime to apply. This briefing describes key features of the  new instrument.

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