A person guaranteed the debt of a company. The creditor settled with another creditor and demanded the outstanding debt.
The Court held that the Israeli Guarantee Law should be construed so that the relationship between a creditor and several gurarantors is the same as the Law of Contracts' set relationship between several debtors. The Israeli Law of Contracts sets that if creditor settled with one of the debtors the other debtors are also discharged unless the discharge shows that this was not the intention. In this case the settlement agreement did not set that proceedings may be continued against the other guarantors and thus the discharge applied to all guarantors.