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A friend of mine has got herself into big trouble with Personal Guarantees. Basically, she tried to help her partner by supporting his failing business (limited company) and very naively signed 2 Personal Guarantees (unsecured) at the same time for equipment (one a Lease and the other an HP Agreement).
Her partner and his business have since gone into bankruptcy so the finance company have now come after her for £100k+ As a single mum on a low income she is likely to lose her home and is unable to obtain legal aid. I’ve looked into the details and have come up with a number of points but I’m unclear whether this is strictly a business contract or whether any Consumer legislation is relevant. Therefore I would greatly appreciate help regarding the strength and legality of the following arguments:
If you can think of any other legal aspect then I’d be extremely grateful.
Her partner and his business have since gone into bankruptcy so the finance company have now come after her for £100k+ As a single mum on a low income she is likely to lose her home and is unable to obtain legal aid. I’ve looked into the details and have come up with a number of points but I’m unclear whether this is strictly a business contract or whether any Consumer legislation is relevant. Therefore I would greatly appreciate help regarding the strength and legality of the following arguments:
- She was summoned to sign these agreements at very short notice – they met the finance company rep in a car park. It was the first time she had seen the documents and she was given no time to read them, in fact they said that she HAD to sign it for financial reasons (the company was failing at the time). Q. IS THIS DURESS AND EXPLOITING HER VULNERABILITY AS SHE DID NOT ENTERED INTO THE TRANSACTION IN FULL KNOWLEDGE OF THE FACTS + DOES THIS RELATE TO CANVASSING OFF TRADE PREMISES + IS THIS HIGH PRESSURE SELLING WITH INADEQUATE TIME ALLOWED FOR THE BORROWER TO REFLECT AND OBTAIN INDEPENDENT ADVICE - THE MISREPRESENTATION ACT?
- She clearly did NOT understand the commitment being made because at the time of signing she did not have this sort of money available Q. DID THE FINANCE CO HAVE A DUTY OF CARE TO ENSURE RESPONSIBLE LENDING?
- At the time of signing the PG she was NOT a Director or the company or involved in the operation of the business QAS SHE DID NOT BENEFIT FROM THE AGREEMENT IS IT INVALID?
- The business had defaulted on a previous contract which is why a completely new agreement was drawn up, although there is no cross reference to this in any of the documentation. Q. DOES THE NEW CONTRACTS/PGs SUPERCEED THE PREVIOUS OR IS THERE STILL A LINK? Unfortunately she also signed PGs on the default contract!!
- There is no wavier of legal advice attached to the PGs – professional advice was NOT discussed Q. DO THEY HAVE A LEGAL OBLIGATION TO ENSURE SHE KNEW HER RIGHTS AS A NON DIRECTOR?
- The equipment involved was ultimately moved out of the UK, which was outside the contractual terms plus the finance co failed to locate their property. Q SHE WAS NOT INVOLVED IN THE BUSINESS SO WAS NOT AWARE ANY OPERATIONS SO HAS THE FINANCE CO FAILED TO PROTECT THEIR ASSETS AND GIVE A DUTY OF CARE TO HER? ALSO DID THEY FAIL TO TAKE REASONABLE STEPS IN THE INTEREST OF FAIRNESS?
- She did not receive any notification that the contracts had been defaulted, although the finance co have stated they sent her details. Q DID THE LENDER FAIL TO PROVIDE RELEVANT INFORMATION AND IN SO CAUSED DETRIMENT?
- From an Administration point of view the PGs:
- did NOT have any financial or time limits on it Q. IS THERE A REQUIREMENT TO SET RESTRICTIONS FOR DEFAULT AND IS THIS OMMISSION GIVING RISE TO AN UNFAIR RELATIONSHIP – see also 11 below?
- Did not show the Company’s (borrower) Registered Office
- From an Administrative point of view on the Leasing/HP contracts there are some minor points:
- The VAT reg number was missing
- Details of equipment insurance was missing
- One contract was for Leasing whereas the other is a HP Agreement
- The PGs were signed by a director of the finance company, yet the wording on the form where he signed states “Signature of Independent Witness” Q. AS A DIRECTOR HE’S CLEARLY NOT INDEPENDENT SO IS THIS MISREPRESENTATION
- Finally, there is a significant discrepancy regarding the dates. There is NO date relating to when the director (borrower) signed the agreements, however, the finance company approved it on 27th Jan. HOWEVER, THE RELATED PGs WERE SIGNED BEFORE THIS ON THE 15TH JAN!!!!!! Q. BEARING IN MIND THE ASSOCIATED PGs WERE POTENTIALLY SIGNED 12 DAYS AFTER THE CONTRACT DOES THIS MAKE THE PGs INVALID?
If you can think of any other legal aspect then I’d be extremely grateful.
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