Director’s Liability For Claims Under Guarantees

There are an increasing number of cases coming before the Court in relation to claims under guarantees, in particular relating to their validity and the authority of company directors to bind the company or individuals in question. Nicholas Gould looks at two of these.

(i) Watersheds Limited v (1) David D A Costa (2) Paul Gentleman - QBD 13 February 2009

Here, a company wanted to raise finance to expand its business operations. Two directors took advice from a corporate finance company. The directors agreed to use the corporate finance organisation's services and the directors guaranteed performance of the company's obligations including payment. One bank loan was obtained, but an investor to provide full funding could not be found. The directors' company went into administration.