Is Your Personal Guarantee Valid?

Is Your Personal Guarantee Valid?

Nobody wants to be held accountable for a Personal Guarantee when it is called upon, typically after a company fails, and many people look for ways to ‘squirm out’ of their commitment/exposure.

However, realism is vital. The basic premise of a Personal Guarantee is that as a businessman or woman, working in a commercial environment, decided to take a line of credit (in whatever form), and a creditor required a Personal Guarantee– so you’re in!

Very often people look to Google to provide a way out, but that’s like checking health symptoms online. Looking for whatever suits your argument, will not resolve the issue.

Personal Guarantees are a difficult area to navigate and indeed creditors must be diligent in the provision and preparation of a Personal Guarantee – as it’s their security.

Very often people look for excuses such as ‘I didn’t get professional advice.’ It’s an argument but it will not win a case as mentioned in the basic premise above. Others include, ‘the Bank Manager is a friend and said they would never call on the Personal Guarantee’ or the general one of ‘I didn’t know what I was signing’…..harsh – but ignorance is not a defence.

Things to look out for that may assist in eradicating a PG include:

• • Availability of the original Personal Guarantee document,
  • Signature issues (polite phrase!),
  • Make sure the Guarantor is lucid and aware,
  • The use of Joint and Several Guarantees with family members (very often wife/ husband) under the Etridge legal principle, and
  • Who actually worked for the creditor on the Personal Guarantee.

Personal Guarantees are Legal Deeds, and their validity is subject to any amount of Case Law and every case is different, so as ever ensure you get the very best advice available and be realistic.