The claimants sought to enforce a deed of guarantee. The defendants argued that the claimant had no entitlement to enforce the deed, not being parties to it, and that they would be able to set aside the deed as against the company whose debts they guaranteed.
Held: ‘although not all deeds can confer rights on a non-party so that the rights are enforceable by the non-party against the party who executes the deed, some deeds can do that. Such deeds are commonly described by the old expression ‘deeds poll’. ‘ and ‘it is common (indeed usual) for guarantees of indebtedness under loan stocks and similar debt instruments to be provided for in deeds executed solely by the guarantor, without the investors in whose favour the guarantees are given having to be signing parties to them.’ It was not necessary to rely upon the 1999 Act. ‘it is quite wrong, and inconsistent with the inherent nature of a guarantee, that the guarantor should be freed from liability to the third party creditor if the guarantor can, after the event, establish that he was deceived by the debtor ‘
‘It is necessary to examine what the parties who execute a document, saying that they are executing it ‘as a deed’ (the modern equivalent of affixing a wax seal), set out to do by it. Does one or more of them in fact make promises to the other or others (as one would expect of a deed inter partes), or do they rather seek to use the document as a means for each of them to make unilateral promises to a person who is not a party to it (or to persons who are not parties to it)? When the conventional word ‘between’ appears, is it an appropriate word given the content of what appears in the document that follows? ‘
Judges:
Park J
Citations:
[2006] EWHC 100 (Ch), Times 27-Feb-2006, [2006] 1 WLR 1847
Links:
Statutes:
Contracts (Rights of Third Parties) Act 1999 3(2)
Jurisdiction:
England and Wales
Citing:
Cited – Arnold v National Westminster Bank Plc HL 1991
Tenants invited the court to construe the terms of a rent review provision in the sub-underlease under which they held premises. The provision had been construed in a sense adverse to them in earlier proceedings before Walton J, but they had been . .
Cited – Chelsea and Walham Green Building Society v Armstrong 1951
Mrs Brooks and Mr Armstrong entered into a deed transferring property from her to him, with provisions about a mortgage in favour of the building society to which the property was subject. The building society was not a party to the deed. Mr Brooks . .
Cited – in re A and K Holdings Pty Ltd 1964
(Supreme Court of Victoria) A company (‘Castley Brothers’) in a group was in financial difficulties, and ten other companies in the group, one of which was A and K Holdings, executed a deed of guarantee which was expressed to be in favour of . .
Cited by:
Cited – Global Distressed Alpha Fund 1 Ltd Partnership v Pt Bakrie Investindo ComC 17-Feb-2011
Action on an instrument of guarantee.
Held: judgment for the Claimant in respect of the principal sum of US$2m. and such interest payments as were due. . .
Lists of cited by and citing cases may be incomplete.
Contract
Updated: 11 September 2022; Ref: scu.238542