A surety for a company’s obligations under a debenture promised: ‘if and whenever the company makes default in payment of any such principal money [to] pay the amount thereof on demand provided that the liability hereunder of the guarantor shall be as a primary obligor and not merely as a surety’.
Held: Fisher J said: ‘The obligation is to pay the principal moneys to become due under the debenture if and whenever the company makes default. The statement of claim refers to it as a guarantee and pleads the company’s default and the consequent liability of the guarantor. The only straw for the plaintiff to clutch is the phrase ‘as a primary obligor and not merely as a surety’ but that, in my judgment, is merely part of the common form of provision to avoid the consequences of giving time or indulgence to the principal debtor and cannot convert what is in reality a guarantee into an indemnity.’
Judges:
Fisher J
Citations:
[1971] 1 WLR 497
Jurisdiction:
England and Wales
Cited by:
Cited – General Produce Co v United Bank Ltd 1979
Lloyd J considered a term in a guarantee agreement as follows ‘if and whenever the company makes default in payment of any such principal money [to] pay the amount thereof on demand provided that the liability hereunder of the guarantor shall be as . .
Cited – Van Der Merwe and Another v IIG Capital Llc ChD 13-Nov-2007
The parties had entered into a debt factoring agreement, under which repayment was sought of some $30m, and the claimants were said to have guaranteed the loan by the factor to their company. The court was asked whether the guarantors had the same . .
Lists of cited by and citing cases may be incomplete.
Contract, Banking
Updated: 04 December 2022; Ref: scu.261295