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Buachaill
Buachaill, Barrister
Category: Law
Satisfied Customers: 10593
Experience:  Barrister 17 years experience
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In 2006 i signed a guarantee business which in May 2014 went

Customer Question

In 2006 i signed a guarantee for the business which in May 2014 went into administration but the bank are pursuing me for the overdraft sum. The original guarantee in 2006 was to support a loan which was repaid in 2009 and I have never had any updated correspondence whatsoever from the bank to confirm that this guarantee was still being held by the bank.
Do guarantees once signed last indefinitely or is there a maximum term that they can be valid for .
Submitted: 1 year ago.
Category: Law
Expert:  Buachaill replied 1 year ago.

1. At the outset, you should get a copy of the guarantee you signed and see what its terms were. However, irrespective of the guarantee you signed, a guarantee lapses once the risk guaranteed by the guarantee alters. Accordingly, if you signed a guarantee for a loan in 2006, which was then repaid in 2009, the guarantee would have lapsed, as the risk would have altered subsequently, if another loan was taken out.

Expert:  Buachaill replied 1 year ago.

2. This is a rule of equity that the obligations of a guarantor lapse if the risk guaranteed by the guarantee alter in amount or extent such that repayment on the guarantee would be unconscionable as the extent and nature of the guarantee would be different to when it was signed. So here you will be able to rely upon this rule to prevent repayment.

Expert:  Buachaill replied 1 year ago.

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