Director escapes guarantee liability

Posted: 12th December 2011

The High Court has ruled that a company director who signed a guarantee over a 35-year lease when he thought that all he was doing was witnessing the signature of a fellow director has no obligation to pay the company's rent debt.
Joshua Yardley had signed the last page of the document, at the request of another director, without having read its contents. He claimed not to have had any idea that he would be personally guaranteeing a yearly rental payment of £32,500. When the company failed, the landlords sought payment under the guarantee.Light Industrial Uit
The landlords argued that Mr Yardley should be bound by the agreement, but the court ruled that Mr Yardley had no liability under the purported guarantee. It was pertinent that whilst the landlords were aware that the company was in difficulties they had taken no steps to satisfy themselves that he understood he had guaranteed performance of the lease.
Before signing any document, you should be clear about what you are signing, why you are signing it and the possible consequences of so doing. When company documents are executed, it is important to have a clear record showing that all those who signed are fully aware of the commitments they are making.