The court sought to construe a deed of variation of a loan agreement. In the case of two or more individuals, the obligations and conditions affecting the borrower were to be binding on the individuals ‘jointly and severally’. Despite this, one of the debtors submitted that her liability under the loan agreement was only pro rata, because it would have required clear provisions in the deed of variation to incorporate the joint and several liability into the loan agreement.
Held: The court rejected that argument. Lord Allanbridge: ‘In my opinion the statement in clause 1.03 of the deed of variation that the obligations and conditions affecting the borrower shall be binding on two or more persons jointly and severally goes beyond a mere definition of the expression ‘the borrower’. It is concerned not with the question who is to be taken to be the borrower – that is to say, with the person or persons to whom that expression extends – but with the measure of the obligations undertaken by those persons in that capacity.’ The whole structure of the loan agreement as varied ‘including the use of the expression ‘the borrower’ in the singular at the outset to describe the two persons who are to receive the loan’ confirmed his view that the debtors’ liability under the agreement was joint and several (as opposed to pro rata).
Judges:
Lord Allanbridge, Lord Sutherland Lord President Hope
Citations:
1991 SLT 823
Jurisdiction:
Scotland
Cited by:
Cited – AIB Group (UK) Plc (Formerly Allied Irish Banks Plc and AIB Finance Limited) v Martin and Another HL 13-Dec-2001
Where a mortgage was taken out by business partners, their liability was joint and several. Partners had taken out a loan, but the terms of the mortgage appeared to make each debtor liable for all sums due from either of them, including for debts to . .
Lists of cited by and citing cases may be incomplete.
Contract
Updated: 09 May 2022; Ref: scu.191136