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.

This case¹ involved two directors of a company that was supplied electrical goods under a written supply contract. When the company was placed into voluntary liquidation, the supplier claimed the amount outstanding from the directors under a guarantee contained in the supply contract.

The directors argued, using the non est factum defence, that they were unaware of the guarantee in the contract because they did not read it.

The court found that the directors were liable because they were careless in failing to read the document before they signed it. In any event, in the signature block where the document stated "please print name of Guarantor", they entered their names.

The onus is on the person who signed the document to prove they acted carefully, not on the other party to prove the contrary.

¹ Rexel Limited trading as Rexel Electrical Supplies New Zealand Limited v AJ Linstrom, SG Bryant and SB Williams, High Court, Auckland, CIV 2006-404-7534, 7 December 2007

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