Legal Updates

An individual guarantor shall be exempt from the guarantee if the guarantee does not stipulate a fixed amount

April 12, 2018
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Published in Afiklaw 256 09.05.2018

A bank demanded immediate repayment of debts of a company which ceased its activity and demanded the funds also against the signatory of the company who signed a guarantee.

The Court held that the law sets special defenses for an individual guarantor – one who is not a corporation or an interested party in a debtor corporation.  Here the guarantor was a signatory of the company but did not meet the definition of an interested party in the corporation and is entitled to the defenses of an individual guarantor. One of the defenses of an individual guarantor is the demand that for the validity of the guarantee it need to be at a fixed amount and because here the guarantee was unlimited, the claim against the signatory was rejected.

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