Content
U-Turns Galore
Premises, Promises
Filing Bonus
RIP: 0% Rate
His and Hers
Party Spirit
State Of The Union
VAT's The Point?
Going Dutch
Away Win For Revenue
WIP-Round
The Best Land Plans
Tax Free Gizmos
Where Theres A Will
Do You Work Here?
Out Of The Shadows
Sacrifice Works
Home Sweet Office
Sauce For The Goose
Blissful Ignorance
PC Or Not PC?
Lost On Penalties
Worth The Paper
Carry The Can
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If you are running a company, you probably hope that "limited liability" protects you from the company's creditors if the business goes bust. Unfortunately, of course, some creditors may ask for personal guarantees. If that's the case, limited liability is not much use against them. A recent case shows that both sides need to be careful where guarantees are concerned. A company lent £100,000 to a company against guarantees from the directors. The company then asked for, and was given, a further advance of £150,000. The directors signed a letter accepting the further advance. Then the company went bust. How much was guaranteed? Not surprisingly, the directors claimed they had only signed a bond for £100,000. But the Court of Appeal ruled that the various documents had to be looked at as all part of the same contract. It made no sense to suppose that the finance company would require a guarantee for £100,000 but would then hand over another £150,000 with no security at all. The letters should have made it clearer, but the judges reckoned that the directors had agreed to back up the whole of the extended loan. If you are asked to guarantee the debts of a business or an individual, know what you are letting yourself in for - particularly if the circumstances change.  |
© Bayar Hughes & Co., 2010.