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Guarantees

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BE EXTREMELY CAREFUL WITH GUARANTEES

You need to know your rights and legal obligations if you are a guarantor of a loan or some other form of debt.

Often, people enter into guarantees thinking that they will never called upon to pay the debt.  However, things often go wrong. 

In those circumstances, the person who lent the money in the first place will come looking for the guarantor.

The Courts will grant relief in certain cases.

If you are a guarantor, you need to know your legal rights.

A guarantee is a promise by a person (the guarantor) to settle a debt or fulfill the promise of someone else.   A guarantee MUST be in writing. 

See our specialist topic entitled  Contracts Enforcement Act 1956 

The person to whom the promise is made is called the creditor or lender and the person on whose behalf the promise is made is called the principal debtor or borrower.

Guarantees often state that the obligation of the guarantor is equivalent to the borrower's obligations. In such a case the lender may call on the guarantor to pay the debt in full .  .  . 

·        without requiring payment from the borrower,

·        without exhausting all of their remedies against the borrower

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"Membership No 186685
I have been unable to acquire any case law in regards to bankruptcy. I am thge alleged defendant in the matter and have opposed the application for bankruptcy as I am not the defendant. The case is now at the stage of the high court requiring a synopsis under 251a, I wish to make submissions in not being notified of the hearing at the district court after the notice of proceeding was served. The matter then got judgement without my knowledge and is now before the high court for bankruptcy. Please advise the procedure to locate any supportive case law that may assist with my application to set aside the bankrupcy claim.

Kindest Regards
A.Marsh
I "

"You will certainly get a rehearing if you were not notified but, if you simply misread the documents you were originally served with then you could be in trouble. You must actively follow up on your obligation to file and serve a defence and not just wait for the Court to come to you. Good luck . . . Netlaw "
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"Received notice from a creditors lawyer that they wish to put in companiy into liquidation and I have up to today upon receiving their letter. A Statory Demand was intially sent on 7 Aril 2008, which I reponded with a reply explaining that an arrangement (verbal) had been entered in by both parties which was to continue supply, once company got post dated cheques, company stopped surpply and but still continued to present cheques which was not the agreement which was entred into.
What position does that leave me if I want to legal challenge this. Without causing me excessive expresses.

Rina

Netlaw responds: If you say that they cannot properly sue because there was a new agreement for time payment, then you can apply for an injunction saying that the Statutory Demand Notice is wrong. But it will cost you. An injunction should not be done without legal advice. Type up a Statement setting out precisiely all the facts as you know them and see a lawyer as soon as possible. A letter shouid be sent to the other side saying how inappropriate the Demand procedure is when the subsequent agreement between the parties was made and kept by you. But you must get your facts right!"

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