Can I challenge a Bank Guarantee?

A Personal Guarantee is an agreement that makes one liable for one's own or someone else's debts or obligations. Often, it will be where we own a limited company but the bank seeks a personal guarantee from the director or directors.

If the borrower defaults, you, the guarantor become liable. It is an exceedingly dangerous document. Once signed, it cannot easily be rescinded.

It is best practice to take proper legal advice before signing any such guarantee as you place your personal assets at risk. If the borrower defaults, the lender can then issue proceedings against you requiring you to meet the payment.

Your rights are pretty thin on the ground. You have a right to be told the truth and not misled. You generally have a right to seek independent legal advice. You have a right to a proper breakdown of the debt. The most significant right you have in relation to personal guarantees is to say - No. Think very carefully before signing. If you are signing, read it carefully and be aware of the potential extent of your liability.

The Legal Company
3rd Floor
55 Old Broad Street
London
EC2M 1RX
(By Appointment Only)

The Legal Company
3000 Manchester Business Park
Aviator Way
Manchester
M22 5TG