In the courts

A lesson for suppliers of goods
In this case, wool was supplied to Feltex shortly before it went into receivership. The terms of the supply agreement were that supplies were only to be made following receipt of payment, but the supplier mistakenly made the supply before payment was received.

Guarantor allowed to set-off amount owed by creditor to debtor
This case outlines the general principle that, in the absence of anything to the contrary, a guarantor may take advantage of any set-off or counterclaim that the principal debtor has against the creditor.

Consent of guarantor implied when he agreed a variation as director
When a sole director and shareholder agreed a variation on the company's behalf, his consent as personal guarantor was implied.

Register your security interests or be prepared to lose priority
When a lessor failed to register its security interest on the Personal Property Securities Register, it had to relinquish amounts collected by it to the holder of a registered general security agreement.

An agreement to give a guarantee can be a guarantee
When an individual signed a letter including an agreement to give a personal guarantee, the court decided that he was liable.

Failure to read a document does not absolve a guarantor's liability
An argument by two individuals that they had failed to read a document they signed and did not realise that it contained a guarantee was rejected by the High Court.

Guarantee unlimited notwithstanding credit limit, and joint and several though not specifically stated
A guarantee of all amounts owing was found to be unlimited notwithstanding a credit limit imposed in respect of the underlying credit. In addition, although the guarantee was not specifically stated to be joint and several, it was found to be.

Claim of breach of fiduciary duty unsuccessful
The High Court ruled against a woman who claimed breach of fiduciary duty by a solicitor because he acted for both her and her husband, who she claimed forced her to sign a guarantee against her will.

Enquiries and information

For more information on any of the cases, articles and features in Financial Services Quarterly, please email Rachel Gowing or call on 64 9 916 8825.