Enforceable Guarantees: Practical guidance for parties

Even without a signature!

Guarantees are routinely included in commercial transactions as a "promise" by the guarantor to answer a debt, a default or miscarriage of another party.

It is common practice when entering into an agreement with a corporation, for supply of goods or otherwise, to request provision of a personal guarantee. An enforceable guarantee can be the difference between recovery and non-recovery of a debt.

The Courts have recently looked at enforceability issues, and in particular, whether it is necessary for a person to sign the guarantee and whether the guarantor intends to be bound in their personal capacity. The findings in regard to these issues could surprise you!