Harvey v Dunbar: satisfaction guaranteed?

By Ruth Evans

Harvey v Dunbar Assets highlights the potential adverse consequences for lenders when guarantees are not fully or correctly executed. When a single composite guarantee is not correctly entered into by all parties, the guarantee may itself be unenforceable.

Harvey and three others entered into a guarantee to enable a company to secure a £3m loan facility. The guarantee imposed joint and several liability on the co-sureties, meaning that if one guarantor were to be sued for the full amount, they would have a claim against their fellow guarantors for a contribution.

One guarantor claimed that his signature was a forgery and he had never actually signed the guarantee. When the bank subsequently tried to enforce the guarantee against another guarantor, Harvey, he claimed that on the assumption that one signature was a forgery none of the sureties were bound…

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