Signed as a deed

[pobrm]

Hi
Looking for advice on a directors guarantee which I gave to cover a business overdraft. The business went down in 2008 and no payments made on the account since then.
The directors guarantee says 'signed as a deed' on it. Does this mean it stands for 12 years, or has it now timed out, statute barred.
The original load was with a high street bank who have allegedly sold the account to 1st credit.
Any help and advice would be greatly appreciated.

[des8]

Re: Signed as a deed

Thelimitation period for acontract under seal(ie a deed) is 12 years.

Hi and welcome.
Others will be along with advice

[pobrm]

Re: Signed as a deed

Thanks des8

Any idea how I can go about getting 1st Credit off my back?

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Also, I have a copy of the signed guarantee which was witnessed by a friend. No signature from the bank though. Any leverage there?

[des8]

Re: Signed as a deed

I don't, but others on here will have some ideas, I don't doubt, and will be along in due course

[Ripped-Off]

Re: Signed as a deed

Whether individuals are bound by guarantees and warranties in the form of deeds was addressed in Bibby Financial Services Ltd v Magson [2011]. It was held that the individuals had not delivered the deeds in question, despite these having been physically handed over to the other side after signature.

Pursuant to s 1(3) of the Law of Property (Miscellaneous Provisions) Act 1989 Act and s74A(1) of the same 1925 Act, in order for a document to be enforceable as a deed, whether executed by an individual or a limited liability company, it is necessary for it to be delivered as a deed. The person who had signed the deed had to have separately indicated that he intended to be bound by the deed. Mere signature was not enough. Nor was it enough that what looked like a deed had been given to the person who appeared to be beneficiary of it. The issue was not whether the document had been physically handed over to the beneficiary, but whether the person whose deed it was supposed to be, intended to be bound by it.

May be worthwhile investigating whether your deed was 'delivered'.

[R0b]

Re: Signed as a deed

Whether individuals are bound by guarantees and warranties in the form of deeds was addressed in Bibby Financial Services Ltd v Magson [2011]. It was held that the individuals had not delivered the deeds in question, despite these having been physically handed over to the other side after signature.

Pursuant to s 1(3) of the Law of Property (Miscellaneous Provisions) Act 1989 Act and s74A(1) of the same 1925 Act, in order for a document to be enforceable as a deed, whether executed by an individual or a limited liability company, it is necessary for it to be delivered as a deed. The person who had signed the deed had to have separately indicated that he intended to be bound by the deed. Mere signature was not enough. Nor was it enough that what looked like a deed had been given to the person who appeared to be beneficiary of it. The issue was not whether the document had been physically handed over to the beneficiary, but whether the person whose deed it was supposed to be, intended to be bound by it.

May be worthwhile investigating whether your deed was 'delivered'.

Delivery of deeds are usually 'delivered' when they are physically handed over or where it is agreed by other means, such as post. The reason why the court held that the deed was not delivered was because they were not the final version of the deed but drafts.

For a deed to be valid there are certain criteria that must be met

1. In writing
2. Must be clear on the face of that it is a deed - usually in the title of "Deed of Guarantee" is sufficient to show this
3. must be executed properly - this means signed by both parties and signed by a witness. This is sometimes where deeds may fail as a party to a deed cannot be a witness.
4. Must be delivered - For a deed to be delivered, it is when the party give an indication or intention to be bound even if the deed is retained in their possession.

Limitation period on deeds are 12 years but if the deed is defective in some way, then it will only be a simple contract which the limitation period is 6 years.

[pobrm]

Re: Signed as a deed

Thanks. Will definitely do some study on those points and then send a response.
Help much appreciated!

[Openlaw15]

Re: Signed as a deed

Hi
Looking for advice on a directors guarantee which I gave to cover a business overdraft. The business went down in 2008 and no payments made on the account since then.
The directors guarantee says 'signed as a deed' on it. Does this mean it stands for 12 years, or has it now timed out, statute barred.
The original load was with a high street bank who have allegedly sold the account to 1st credit.
Any help and advice would be greatly appreciated.

If the business was liquidated all creditors should be on equal footing. Did the business go bankrupt? Was the company registered, ie a legal company (or incorporated to use the legal term) such as LTD? What this means is unless there were certain protections in place, ie land charges or retention of title clauses in place to secure for the debt, ie the guarantee's value amount, then the company's liquidation normally means the guarantee interest has legally died with the company. I may be wrong on your facts however.

[pobrm]

Re: Signed as a deed

Thanks for that.
Yes it was a Limited company and went into liquidation. The document is Titled Directors Personal Guarantee.
There are signatures of two directors (myself being one) and the signature of a witness. The document was not signed in the presence of anyone at the bank and was mailed back to them. It doesn't have a signature of anyone at the bank and just has a stamp on the front 'Received 19 October 2004'.

[R0b]

Re: Signed as a deed

Arguably if the bank hasn't signed the deed then the deed is ineffective as it requires signatures from both parties and you don't have one. Although by accepting the money from the bank would likely amount to a binding agreement, the agreement would be a simple contract which as above has a limitation period of 6 years and therefore statute barred

[pobrm]

Re: Signed as a deed

Cheers. I'll reply with a statute barred letter and see what they come back with

[Openlaw15]

Re: Signed as a deed

Thanks for that.
Yes it was a Limited company and went into liquidation. The document is Titled Directors Personal Guarantee.
There are signatures of two directors (myself being one) and the signature of a witness. The document was not signed in the presence of anyone at the bank and was mailed back to them. It doesn't have a signature of anyone at the bank and just has a stamp on the front 'Received 19 October 2004'.

A contract does not have to be in writing, as there can be verbal assent. Nevertheless, unless the bank had taken out security by way of a land charge against your property i do not believe that for an incorporated company ie Ltd et al, that any guarantee it promises to honour can survive where the company has legally died. if it were a sole trader it is not incorporated and any claims would survive. It is simply pari passu...all creditors are on equal footing and therefore none including a guarantee to a bank can survive any greater interest than a mortgage, charge, or lien. The bank knows full well that a guarantee is as good as useless in the event the company is liquidated, this is why the companies have the legal status, to withstand non priority creditors. The pari passu rule, well there are and will be exceptions to it, but it will take a good commercial lawyer to know them in all likelihood. It is a very good defence for you for a start!

[wales01man]

Re: Signed as a deed

Reading what Openlaw is saying a personal guarantee to a bank for money lent to a LID company is not enforceable if the company goes dead im sure Banks must know this or are their legal advisors wrong?

[R0b]

Re: Signed as a deed

The defence of pari passu will be a non-starter I'm afraid. The legal definition of guarantee is that it is a secondary agreement in which a person (the guarantor) is liable for the debt of another.

Yes all creditors are on equal footing with the company but does not apply to guarantees because that person has essentially agreed to cover the payments should the ltd company fail to do so. It is a secondary obligation which supports the primary. Most of the time, banks will require a guarantor because they may have doubts about the business being able to repay the amount and is additional security if the ltd company fails. However within the Guarantee document I wouldn't be surprised if there is an indemnity clause in there which then creates a primary obligation meaning you are responsible for another's loss.

The starting point will be that the deed has not been validly executed due to no signature of the bank.

Has there been any other amendments to the guarantee over time?

[Openlaw15]

Re: Signed as a deed

The defence of pari passu will be a non-starter I'm afraid. The legal definition of guarantee is that it is a secondary agreement in which a person (the guarantor) is liable for the debt of another.

Yes all creditors are on equal footing with the company but does not apply to guarantees because that person has essentially agreed to cover the payments should the ltd company fail to do so. It is a secondary obligation which supports the primary. Most of the time, banks will require a guarantor because they may have doubts about the business being able to repay the amount and is additional security if the ltd company fails. However within the Guarantee document I wouldn't be surprised if there is an indemnity clause in there which then creates a primary obligation meaning you are responsible for another's loss.

The starting point will be that the deed has not been validly executed due to no signature of the bank.

Has there been any other amendments to the guarantee over time?

Directors are collectively part and making transactions in the name of the company, but any guarantee the company makes are only binding whilst the company is still operating. If the legal company dies so do any debts belonging to the company, ie in its name. A guarantee to a bank in the legal company's name by the company's directors without the bank taking a charge on the property is no exception. It is the bank's imprudence not to secure its interest via property charge, lien or other useful security. This is the nature of commercial law - priority of debtors - legal mortgage, charges....all others are unsecured debtors.