D - Discharge by material variation
7/6/13
CIMC RAFFLES OFFSHORE (SINGAPORE) LTD v SCHAHIN HOLDING SA [2013] EWCA Civ 644
Although normally a court may be able to deal summarily with the question of law whether a variation to a principal contract fell within the purview of a guarantee, on the facts the court needed to have regard to the factual matrix. Summary judgment was not therefore appropriate.
6/6/13
TOPLAND PORTFOLIO NO 1 LTD v SMITHS NEWS TRADING LTD [2013] EWHC 1445 (Ch)
A surety was discharged from liability under a guarantee of the lessee’s obligations in a lease which had been varied without the surety’s consent to allow the lessee to carry out works on the premises. The works had not been contemplated by the lease and the extra repairing obligations increased the risk of the lessee’s default. The variation could not be regarded as insubstantial or in the nature of a forbearance. There was no residual discretion available to the court to allow the guarantee to be enforced.
2/5/13
NATIONAL MERCHANT BUYING SOCIETY LTD v BELLAMY [2013] EWCA Civ 452
An all monies guarantee for the liabilities of a company which had been given when the guarantor had been a director of the company, was enforceable for increased liabilities incurred after the guarantor had resigned as a company director. The guarantee had been given for a contemplated course of dealing, not for a specific contract, and the liabilities had been incurred within the scope of those dealings. The guarantee could not be construed as covering only a facility with a credit limit of which the director had been aware before his resignation.
25/1/13
RVB INVESTMENTS LTD v BIBBY [2013] EWHC 65 (Ch)
Disclaimer of a lease as onerous property by the liquidator of the lessee company did not discharge the defendant surety nor did the covenants in the lease have that effect. On dissolution of the company the lease vested in the Crown and continued. The fact that the landlord had not followed the correct rent review procedures did not prevent specific performance of the surety’s obligation to execute a new lease. But the new lease would be at the old rent.
19/12/12
AVIVA INSURANCE LTD v HACKNEY EMPIRE LTD [2012] EWCA Civ 1716
A performance bond securing a contractor's performance of a construction contract was not discharged by payments made to the contractor because the payments were made by way of loan under a separate agreement and were not advance payments under the construction contract. The rule in Holme v Brunskill that a surety may be discharged by variations only applies if the variations are to the guaranteed contract.
8/11/12
CLOSE BROS LTD v RIDSDALE [2012] EWHC 3090 (QB)
Changes to guaranteed facilities did not amount to material variations discharging the sureties from liability because the sureties had consented to them and the changes were not outside the purview of the guarantee.
27/7/12
NATIONAL MERCHANT BUYING SOCIETY LTD v BELLAMY [2012] EWHC 2563 (Ch)
Good consideration can be given for a guarantee even if the parties are not conscious of it. Extrinsic evidence can also be given of consideration not expressed in the guarantee. A threat to withdraw credit facilities unless a guarantee was signed was not economic duress because the creditor had the right to withdraw the facilities so the threat was legitimate. The creditor had no duty to advise the intending guarantor to take separate advice independent advice before signing. A later request for a new guarantee had not been a repudiation of the existing guarantee. Nor did a subsequent variation in the terms of the facilities discharge the guarantor because the guarantee covered all obligations of the company, present or future and there was nothing in the surrounding circumstances to imply any limitation.