New Jersey Supreme Court Explains Requirements of Enforceable Personal Guarantees
In New Jesey business law, a person or business may personally guaranty the performance of a third party. If the third party defaults on its obligations, the party which gave the personal guaranty (the “guarantor”) then becomes liable for the third party’s default. Different states have different requirements for the enforcement of personal guarantees, however. On December 2, 2025, the
New Jersey Supreme Court issued an opinion in the case of Extech Building Materials, Inc. vs. E&N Construction, Inc., explaining the requirements of an enforceable personal guaranty under New Jersey contract law. The main element is that the guarantor must clearly and unambiguously express its intent to personally guarantee the third-party’s obligation.
Background
E&N Construction, Inc., a construction company, signed a two page agreement with Extech Building Materials, Inc. to purchase construction supplies. They signed a two page, six paragraph agreement. The sixth paragraph provided:
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