Q&As

What is the limitation time in respect of a guarantor’s obligations under a personal guarantee when the principal borrower has defaulted?

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Published on LexisPSL on 23/08/2019

The following Banking & Finance Q&A provides comprehensive and up to date legal information covering:

  • What is the limitation time in respect of a guarantor’s obligations under a personal guarantee when the principal borrower has defaulted?
  • Limitation periods
  • Does a guarantee have to be executed as a deed?
  • Limited guarantees
  • On demand

When a limitation period starts to run, and for how long, in the case of a claim under a guarantee, will depend on how the guarantee is executed and whether the guarantor’s obligation under the guarantee to make payment arise only once a demand under the guarantee has been made.

Limitation periods

Generally, the limitation period for bringing a claim for breach of contract is:

  1. six years from the date of breach of a ‘simple contract’ (one which is not under seal or a contract of record)

  2. twelve years from the date of breach of a deed

For more information, see Practice Note: Limitation—contract claims.

Does a guarantee have to be executed as a deed?

A guarantee can be executed as a deed or as an agreement in English law. For more information, see Q&A: Does a guarantee have to be executed as a deed? If a guarantee is exec

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