Q&As

Is an agreement to pay x if y fails to make payment a guarantee or does the word guarantee need to be used? Does it make any practical difference?

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Produced in partnership with Emma Horner of 4 Stone Buildings
Published on LexisPSL on 13/06/2017

The following Banking & Finance Q&A produced in partnership with Emma Horner of 4 Stone Buildings provides comprehensive and up to date legal information covering:

  • Is an agreement to pay x if y fails to make payment a guarantee or does the word guarantee need to be used? Does it make any practical difference?

Is an agreement to pay x if y fails to make payment a guarantee or does the word guarantee need to be used? Does it make any practical difference?

The use of the word 'guarantee' is not determinative as to whether a contract of suretyship is indeed a contract of guarantee. The Court of Appeal decision in IIG Capital shows that using the word 'guarantee' does not always mean the contract will be treated as such; it is a question of construction. Failure to use the term 'guarantee' will not necessarily make a practical difference. It is a question of construction and 'every case must depend upon the

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