Find a service

T. 0114 276 5555

Failure of a Multiple Guarantor to Validly Sign May Invalidate All Guarantees

Share this page:

The Court of Appeal recently found that one of four intended guarantors to a Loan facility was not bound in his individual capacity to guarantee the Loan because not all of his co-guarantors had validly signed the documentation.

hlw Keeble Hawson logoMr Harvey agreed to act as one of four guarantors in relation to a loan to be made available by the Defendant to a development company, and he and two others validly signed a “joint and several” guarantee. A fourth person appeared to have signed the guarantee, however this was found to be a forged signature.

The Court recorded that there is no absolute rule that if one guarantor does not sign, the others are not bound. However, if the document show that it is intended to be a joint composite guarantee contained in a single document with a single definition of ‘Guarantor’, which assumes that it will be signed by all the guarantors, then the starting point is that the guarantee will be subject to the condition that all the guarantors` signatures are necessary for its validity.

In the case in question, the Court concluded that there was nothing in the express or implied terms of the guarantee, which altered the result that Mr Harvey would not be bound, if any of the other guarantors failed to sign.

This case therefore highlights that vigilance should be exercised to ensure that all guarantees are properly drafted to reflect the individual circumstances of the guarantee and that all of the proposed guarantors validly execute the guarantee.

For further advice on this or any other issues on disputes regarding financial documents please contact Sarah Burton on 01302 308662 or sarahburton@hlwkeeblehawson.co.uk
 

Share this page:

Get in Touch