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ARTICLE · 13 APRIL 2022

Spouse Liable Under Guarantee As Accommodation Surety Despite Lack Of ILA

Gardiner Roberts LLP
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Loan guarantees are often provided by parents, spouses or siblings to other related parties.

CanadaLitigation, Mediation & Arbitration
James R.G. Cook
James R.G. Cook
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Loan guarantees are often provided by parents, spouses or siblings to other related parties. The person signing the guarantee usually does not receive any direct financial benefit for doing so. While the potential for undue influence is a concern in such cases, an otherwise competent guarantor is responsible for taking reasonable steps to ensure that they understand their personal obligations. Generally, a lender is entitled to rely on the commitment provided by the guarantor without ensuring that they receive independent legal advice (ILA), unless there are specific reasons why such advice is required in the circumstances.

The decision in Business Development Bank of Canada v. ROC Ice Cream Inc, 2022 ONSC 1945 (CanLII), demonstrates that a guarantor will generally be bound by the terms of the guarantee that they provide absent non est factum, unconscionability, fraud, misrepresentation or undue influence.

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