Screwfix Direct Personal Guarantee Validity

[onthefloor]

Hi All

I know a previous post had a issue with a Credit Application Form that also sought to imposed a Personal Guarantee as well.

 

 

I have a issue with a Credit Application Form that I signed back in early 2008 for a Screwfix Direct company credit account.

Screwfix's solicitors are now chasing me because the company has gone into administration.

 

 

The application form did not have a clause under the Legal Requirements section that this was also a personal guarantee,

but did have the following wording above the signature box

"I the director agree to guarantee performance of all the company's financial obligations to Screwfix Direct Ltd and its subsidiaries".

I had signed tens of credit account applications during my time as a director, but never spotted the wording on this one.

 

 

The comments from the previous posts seemed to suggest that because the section is not headed in bold "Guarantee" but "Agreement"

and the signers attention is not specific drawn to the above wording, that this could be classed as "misrepresentation".

 

 

I have used this argument with Screwfix's solicitors, which they dismissed, but hope that somebody has already had this same issue

and have some more positive arguments that I can use in my case.

I am hoping that poster toddle2u my be able to shed some usefull information.

 

Any thoughts or advice would be very helpfull.

 

onthefloor

[The Mould]

Good evening onthefloor

 

Can you post up the entire contract please.

 

Kind regards

 

The Mould

[The Mould]

Thank you for the above document OTF, however, I cannot read the contents of the contract as the image is too small. Try and attach the document again please.

 

Kind regards

 

The Mould

[onthefloor]

Hi The Mould

 

Mny thanks for the reply, I have been trying to attach the document again, but it keeps coming out the same very small size. I have now managed to attach a pdf file that hopefully will allow you to read it.

You help is very much appreciated, especially as I have this morning received a small claims court for the alleged debt.

 

Again many thanks

 

Peter

CCF08112011_00000.pdf

[The Mould]

Good evening OTF

 

Thank you for the attached copy of the alleged personal guarantee agreement.

 

It would appear from the contents of the said contract that there be a guarantee in respect of performance of the Company’s financial obligations to Screwfix Direct Ltd and its subsidiaries, however, if such guarantee is held to be a valid guarantee agreement, then such was given by the Director of the Company and not by you personally.

 

I would refer you to the following statute:

section 4 of the Statute of Frauds 1677:

 

"No action shall be brought…whereby to charge the defendant upon any special promise to answer for the debt, default or miscarriages of another person…unless the agreement upon which such action shall be brought or some memorandum or note thereof shall be in writing and signed by the party to be charged therewith or some other person thereunto by him lawfully authorised."

 

Further to the above, as will be noted, the Director signed the said application form, the Company is no longer extant, therefore, the legal entity whom gave the said guarantee no longer exists and so it follows that as you did not agree to stand as personal guarantor for the Company’s financial obligations and thereby personally answer for the Company’s debts, the claimant has no cause of action against you, his cause of action complained of lay with the extinct Director of the Company.

 

Seek the services of an independent professional who is experienced in contract law and litigation and in particular to contracts of guarantee.

 

In any event, acknowledge service of the claim, defend the same, and rely upon the said statute in your response to allegation of personal liability made by the claimant.

 

By the way, could you please scan in and attach a copy of the terms and conditions that are stated as being on the back of the said contract.

 

Kind regards

 

The Mould

Edited November 8, 2011 by The Mould
Paragraphs

[onthefloor]

Hi The Mould

Again many thanks for the info.

I do not have a copy of the terms and conditions referred to in the Trade Credit application, I only have the front sheet with my signature on.

 

A previous post on here, also concerned Trade Credit Application forms that also sought to impose a personal Guarantee on the signer

in their personal capacity even though the form was signed as a director of the company.

 

 

Attached to that post was a link to a case in Scotland, where the courts ruled on appeal

"that a personal guarantee in a contract is something which is not unusual, but if it is to be included, fair notice of it must be given to the person giving the guarantee"

 

 

In this case the section signed by the director was headed in bold Guarantee and used the term "personal guarantee"

and the courts held that was sufficient notice.

The form I signed did not have a heading Guarantee and does not have the wording personal guarantee.

 

Interestingly, the later versions of Screwfix's Trade Credit Account Applications

( i do not know when they changed) have been changed so that under Legal Requirements a new clause has been added in bold

saying that I, the director, agree to guarantee performance of all the company's current & future financial obligations

to Trade UK including any subsequent increases in credit limit.

 

 

I can only assume that Screwfix have change the terms following challenges to their previous wording.

I will as you suggest acknowledge the claim and submit a defence.

Again thanks for the info and help

OTF

[toddle2u]

You need to read and understand my post on a previous thread (copy below). Looking at the application form I would say they are on very dodgy ground. Just because their solicitors dismissed it it doesn't mean they are right. You need to quote all of the below to them not just the misrepresentation. How much are they chasing? I also agree with the Mould's line of argument in the fact that the form says "I the director" rather than as you as an individual. You need to put everything in your defence and it is my experience that they will withdraw their claim or accept a low f&f offer.

 

1) Misrepresentation - the document is headed 'Credit Account Application Form' and for it to be a PG is misrepresentation by creditor

2) i did not sign the Applciation Form in a personal capacity but as a Director of XXX Limited. It is further submitted that if this Application Form is found to be a guarantee it has an unreasonable indemnity clause within the meaning of the Unfair Contract Terms Act 1977 (”the 1977 Act”). The form that is the subject of this guarantee was between the Claimant and XXX Ltd. My involvement as a guarantor was purely a personal matter between myself and XXX Ltd

3) My trade or profession is not that of guarantor and I did not provide this guarantee in return for a fee or commission. It is therefore submitted that I was ”dealing as a consumer” within the meaning of section 12 of the 1977 Act (R & B Customs Brokers Company Ltd v United Dominions Trust Ltd [1987] EWCA Civ 3).

4) As a result of the above case, the guarantee must be reasonable and it is submitted that the guarantee does not meet the reasonableness test of section 11 of the UCTA1977 Act and it is noted that by subsection (5) that it is for those claiming that a contract term or notice satisfies the requirement of reasonableness to show that it does.

5) It is my belief that the guarantee does not meet the reasonableness test for the following reasons.

6) I had no intention of entering into a personal guarantee

7) What is purporting to be a personal liability is incorporated in the body of a document which is clearly designed to impose liability on XXX Limited and not myself personally.

8) It has been shown above that I am a consumer in this case. Under the Unfair Terms (Consumer Contract) Regulations 1999 (regulation 8) an unfair term is not binding on the consumer and therefore I cannot be held liable for the XXX Ltd debt.

9) Under regulation 5(1) of the UTCCR a contractual term that is not individually negotiated will be regarded as unfair if, contrary to the requirements of good faith, it causes a significant imbalance in the parties rights and obligations arising under the contract, to the detriment of the consumer. The Application Form was clearly pre-printed and was a standard form of the Claimant and therefore cannot have been individually negotiated. By trying to pass the liability of a third party to myself, without my knowledge, there has clearly been a imbalance in the parties rights and is to the detriment of myself financially.

[mara13]

I am in the same position. Will you please be able to tell us, what happened between you and Screw fix at the end? I am about to disagree with them. Thanks

[onthefloor]

Hi Mara13

 

In the end after mediation I made a payment to Screwfix that was less than they wanted, but more than I wanted to pay. I found mediation totally worthless.

Not sure I can be of anymore help to you, wish I could. Lots of helpfull advice received via this site, but my advice form a solicitor was pay.

 

Thanks

[Gaston Grimsdyke]

I would have thought there is a cast iron defence to this, namely that the guarantee has to be by deed to be enforceable and on the wording described in this thread it does not appear to be (i.e. it does not say it is executed as a deed and is not witnessed). Put that to Screwfix's solicitors and see what response you get.

[fitzy3]

Hi Mara13

 

Did you also dispute this issue and how did you get on. They do seem to be very underhand with this particular document.

[The Mould]

Hi Mara13

 

In the end after mediation I made a payment to Screwfix that was less than they wanted, but more than I wanted to pay. I found mediation totally worthless.

Not sure I can be of anymore help to you, wish I could. Lots of helpfull advice received via this site, but my advice form a solicitor was pay.

 

Thanks

 

OK, that's your call and no-one here can argue against the same.

 

However, just to be clear on this point of law, signing a Guarantee Agreement in the capacity of the Director of the Company by a named person such as Mr John Smith, does not mean that Mr John Smith is liable for the same claimed under the Guarantee agreement, because............... Mr John Smith and the Director of the company in this respect are two entirely different entities - see my previous post above on this matter - Statute of Frauds 1677.

 

Kind regards

 

The Mould

[fitzy3]

Hi The Mould

 

Sorry to jump into someone else s thread but based upon your point of the company no longer being an entity, is this also relative if the director had resigned many months prior to the company defaulting. I have the same situation with the same document however I had resigned from the company 7 months prior to them going into administration. I pointed this out to the claimant and they say it is irrelevant as I had never provided them notification and so they were unaware. I find this difficult to believe as it was registered at companies house and thus would have flagged up with the likes of Experian or D&B.

 

Any advise would be greatly appreciated.

[The Mould]

If you signed the Guarantee in the Capacity of Director of the Company and resigned there from several months before the creditor called in the guarantee,

 

 

then you are not liable for debt claimed because

 

 

a) you signed the guarantee agreement as director of company and

 

 

b) you resigned from the company several months before the creditor sought to enforce the same against you, based upon these circumstances, it is not a personal guarantee, therefore, you are not liable.

 

Kind regards

 

The Mould

[The Mould]

PS. Sorry for the highjack of this case. Fitzy3, can you please start your own thread/case in these legal forums in order to avoid any confusion.

 

Kind regards

 

The Mould