A contract was set aside where the plaintiff who had put up treasury stock as security, was not told of arrangements between the debtor and the bank whereby the security would be used to repay the loan. A creditor must reveal the disadvantageous nature of a loan to a proposed surety: ‘The creditor is under a duty to the surety to disclose to the surety contractual arrangements made between the principal debtor and the creditor which both, (a) make the terms of the principal contract something different from those which the surety might naturally expect and, (b) materially affect the degree of the surety’s responsibility.’
Judges:
Michael Burton QC
Citations:
Times 27-Jan-1995, [1995] 1 WLR 1260, [1995] 2 All ER 615
Cited by:
Helpful – Lloyds TSB Bank Plc v Shorney and Another CA 20-Jul-2001
The defendant had signed a guarantee and supporting charge to support her husband’s business debts. It has been expressly limited to andpound;150,000. Without prior notification, or seeking her consent, the bank extended the loan. When it later . .
Lists of cited by and citing cases may be incomplete.
Insolvency, Banking
Updated: 09 April 2022; Ref: scu.83032
