Cooper v Bank of Scotland: inter-spouse guarantees revisited

By Andrew Foyle

After a lengthy period of silence, a new case in the court of session reminds lenders that a high degree of care is required where a wife is granting a security on account of her husband’s debts. Shoosmiths examines what lessons might be learned.

In the case of Smith v Bank of Scotland 1997 SC (HL) 111, the courts extended the English legal position that they had formulated in the case of Barclays Bank plc v O’Brien into Scotland. Thus, where a spouse was granting a security for his or her spouse’s business debts, the court imposed a duty on creditors to warn a potential cautioner (the Scottish term for a person granting a guarantee or security on another’s debts) of the consequences of entering into the proposed arrangements and to advise him or her to take independent advice.

Following Smith, there was a series of cases litigated in the court of session that further defined the parameters of the principle…

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