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Personal Guarantee – Can one signature serve two purposes?

A guarantee needs to be in writing and signed by the guarantor or the guarantor's agent (Yes, someone else can be authorized to sign).

This is another in our occasional series of articles concerning personal guarantees.

This a requirement of the Statute of Frauds ( which is reproduced in different legislation in each state).

Two Guarantors – only one signs

  • A common situation is where 2 directors of a company are required to sign a personal guarantee but one signs and one doesn’t.
  • A well drafted Personal Guarantee will say that the person who signed is liable even if their fellow director did not sign.
  • In other circumstances, it might be a condition precedent that the guarantee does not come into effect until all of the guarantors have signed.
  • There have been instances where guarantees have been set aside on the grounds that it was misrepresented to the person signing that someone else had also signed a guarantee for the debt, when they had not.