Obligations and Commercial Instruments
I Guaranteed a Debt: When Can I Be Liable?
The scope of a guarantee, changes to the debt and recourse after payment.
Read the whole guarantee
A guarantee can expose the guarantor to liability when the debtor defaults. Under Cap. 149, identify the debt, currency, interest, costs and any limit. Determine whether it covers a single transaction or continuing dealings. A guarantee is more than a personal reference.
Changes need individual assessment
Variations, extensions and loss of security may affect the guarantee differently. Consent and contractual wording matter. The absence of proceedings against the principal debtor does not invariably prevent a claim against the guarantor. A defence must address the actual agreement and facts.
Request an account before paying
Obtain the loan, guarantee, statements and notices. A paying guarantor may have recourse and rights in securities. Clarify the effect of any payment or release and respond to court documents within the applicable period.
This publication is for general information and does not constitute legal advice on a particular matter. Legislation and case law may change. Seek legal assistance promptly, especially where a court or application deadline may apply.