Basically, a director of a company (which is now liquidation) sought to obtain a trade credit account with a supplier. On the credit agreement which was signed in his capacity as director he entered the required credit amount as £25,000.
At the foot of the form was a section headed 'customer declaration' under which it was stated 'in consideration of X agreeing to supply the applicant company on a credit account basis, we the undersigned, being owners/directors of the applicant company, jointly and severally personally guarantee,unconditionally and irrevocably full and complete payment of all financial obligations of the applicant company to X. X may, in its sole discretion, increase the level of credit to be afforded to the applicant company at any time'
This wasn't read at the time, and the directors attention was never drawn to it. The application was duly signed.
At the time of the company going into liquidation a sum much in excess of the 25,000 was owed and X sought to rely on the personal guarantee provision within the application to recover the whole amount apparently due.
I am a law student faced with this scenario and asked to prepare a defence for the director. I think there is the possibility for the action to be dismissed as X fails to give fair notice of the term within the application purporting to create a cautionary obligation, to the director who as far as he was concerned was signing only in his capacity as a director.
Thank you so much. I'll have a read. My project then goes on to ask if, should that fail, that the amount available to be recovered should be limited to £25,000. Any thoughts on this? Or is this covered in Montgomery? I'm actually at my part time job just now so not had the chance to have a look!