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ARTICLE · 03 DECEMBER 2018

Cross all Ts, dot all Is: Personal guarantees gone wrong

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This case highlights that creditors must get personal guarantees right or they may risk not being able to enforce them.

AustraliaFinance and Banking
Sean Greenwood
Sean Greenwood
Esther Khoo
Esther Khoo
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Introduction

There are occasions, especially for small to medium size enterprises, where the company's director or directors have to provide a personal guarantee in order to obtain finance and/​or goods and services on credit. A personal guarantee empowers the lender or supplier to make the guarantor pay, on demand, all or part of the borrower or customer's debts, in particular when the borrower or customer becomes insolvent and is unable to pay.

For this reason, it is important for a lender or supplier to make sure any guarantee is property drafted and that there is no room to move nor arguments available to get the guarantor off the hook.

In 2017 the New South Wales Supreme Court was required to deal with a punctuation mark in a guarantee, and the question of what effect it had on the application of the personal guarantee.

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For further information please contact:

Michael Byrnes, Partner
Phone: + 61 2 9233 5544
Email: [email protected]

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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