A guarantor is the darling of the courts. Over the years, the case precedents to which courts adhere have favoured guarantors over lenders. The consequence is that there are many ways for guarantors to evade liability. Because we know what those precedents are, the bulk of a typical corporate guarantee is to remove those common law rights one-by-one
The course carefully goes through each clause, explains the problem that we need to address, and identifies how the clause achieves its objective.
Additionally, guarantees have a number of ‘voodoo’ words and phrases – words that have special legal meaning. Altering those words or phrases could inadvertently alter the legal effect of the document. We take special care to identify them and the potential risks.
Some comfort letters are enforceable as contracts, others are not. The documents by their nature are vague as to their contractual status, but we go through the method of determining their enforceability.