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ARTICLE · 24 MAY 2017

Guarantors: Independent Legal Advice?

Arthur Cox
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The Court of Appeal's position is now very clear on the question of guarantors needing independent advice - unless an individual guarantor has an arguable defence...

IrelandLitigation, Mediation & Arbitration
Arthur Cox
Arthur Cox
Hilary Callanan
Hilary Callanan
Kevin Lynch
Kevin Lynch
David Molloy
David Molloy
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The Court of Appeal's position is now very clear on the question of guarantors needing independent advice - unless an individual guarantor has an arguable defence that he/she has been the subject of undue influence or misrepresentation by the debtor, the Courts will not find that the lender was under a positive duty to ensure that the guarantor received independent legal advice.

ACC LOAN MANAGEMENT LIMITED VCONNOLLY1

The judgment of the Court of Appeal was delivered on 4 April 2017.

  • Facts: A father guaranteed the debts of his son to ACC. The son borrowed from ACC in 2005 and 2007, and his father provided guarantees in 2005 and 2008. The son defaulted in repayment of his loans, and ACC began legal proceedings in 2013. In February 2015, ACC successfully obtained summary judgment in the High Court against the son, and against the father in respect of the 2005 guarantee.2

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