Legal Know-How
Learn more about us
  • Welcome
  • People
  • Recent matters
  • Legal news
  • Testimonials
  • Contact us
  • Secured client access

Can a guarantor escape liability because the guarantee is not witnessed?

6/7/2013

1 Comment

 
Picture
In a judgment handed down on 28 July 2013 in the Supreme Court of Victoria, a guarantor contended that there was no evidence that he had executed the guarantee in question because his signature was not witnessed, and as such he was not personally liable. 

In trying to get out of a guarantee that he gave as director of the borrower company, the guarantor’s defence did not involve denying that the document bore his signature or that he did not give a guarantee, but rather that the guarantee was not “properly and duly executed”. This defence did not sit well with the judge who said “whatever that means”. The judge also noted that there was no evidence that might otherwise explain what looked like a routinely executed guarantee was not what it seemed to be. By now you would have guessed the judge’s decision - that the guarantor was liable and he had to honour the guarantee.

This case dealt with a number of complex legal issues but this aspect of the case is easy to understand. The moral of the story is this – providing a guarantee is serious business. Financiers often require the directors of a company borrower (SMEs as well as big corporations) to give personal guarantees before providing finance for business purposes. It will be wise for a guarantor to seek independent legal advice (and perhaps independent financial advice too) before entering into a guarantee. And the courts are probably not going to be sympathetic to a guarantor who tries to escape his or her obligations, especially when the basis of the defence is unrelated to the authenticity of the signature but a technicality regarding the manner in which the signature was witnessed. 

Contact us if you need advice on going guarantor.

1 Comment

    About

    Welcome to legal news. This is about legal know-how relevant to lawyers and business people alike.

    Archives

    October 2015
    September 2015
    August 2015
    July 2015
    June 2015
    May 2015
    March 2015
    January 2015
    November 2014
    October 2014
    September 2014
    August 2014
    May 2014
    April 2014
    March 2014
    February 2014
    January 2014
    October 2013
    July 2013
    June 2013
    March 2013
    January 2013
    November 2012

    Categories

    All
    Business Lending
    Case Law
    Credit
    Drafting
    General
    Guarantees
    Intellectual Property
    Knowledge Management
    Legal Practice Management
    Legal Technologies
    Legislation And Regulation
    Personal Property Securities
    Privacy
    SME Q&A Series
    SMEs

    RSS Feed

© 2014 Karen Lee | Legal Know-How
All rights reserved
Information and notices