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If you give a PG, take care or insure it.

Posted on 17th Sep 2015 13:39:50 in Personal Guarantee Insurance

Ir is important when giving a Personal Guarantee that you ensure you know what you are agreeing to and the extent of your liability.

  • Your PG must be given in writing and signed by the guarantor or an authorised agent.
  • The lender must be a party to it, but does not need to sign it.
  • Generally it doesn't kick in until the company debtor is liable.
  • Liability will generally be to the limit that the company is liable.
  • Liability arises when the company defaults and the Guarantor has been served with a demand.

How to challange it

  • Were there material alterations to the PG after signature?
  • A prejudicial amendment to the Guarantor would render it unenforceable.
  • See if the Guarantee can be revoked.
  • Were you induced to enter into the PG by misrepresentation of the lender.
  • Were you unduly influenced to enter into the PG

What can you do when you receive the demand

  • Seek an indemnity against other directors, share the burden.
  • Can you get the subrogated rights to collect assets of the business to mitigate losses.
  • Can it be defended, perhaps using a defence the company might have.
  • Take professional advice

Better still take the paidn and worry away by insuring your PG