Lease guarantor released when landlord granted licence for works

By Brian Cain

A guarantor will be released from liability if the parties to the contract that is guaranteed vary its terms if the guarantor does not confirm its obligations. The rule will be strictly applied and not all protective language will be effective to prevent the guarantee being lost.

A landlord sued the surety for unpaid rent due under a lease when the tenant (a subsidiary of the surety) became insolvent. The surety argued that it had been released from liability because the landlord’s predecessor in title had varied the lease by granting a licence authorising certain alterations to be made to the premises without asking the surety to confirm its guarantee.

The licence granted was in terms that attempted to make it clear that the lessee’s obligations for payment of rent etc would not be increased simply as a result of the carrying out of the alterations…

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