A recent Singapore High Court decision is a reminder that a personal guarantee can become a personal debt.
What Happened
A doctor promoted to medical director of an aesthetics clinic signed a deed of guarantee for the clinic’s S$600,000 loan. When the clinic stopped repaying, the lender called on the guarantee. The court rejected his defences and held him liable.
Key Lessons
- Read before you sign: Not reading the document is not a defence.
- Assurances do not bind the lender: A promise by your employer or business partner that you will not have to pay does not release you.
- Minor lender irregularities will not void the guarantee: The court treated a backdated form as an administrative lapse.
Before Signing a Guarantee
- Could you repay the full amount yourself?
- Is the guarantee limited or unlimited, and how long does it last?
- Have you read every page and obtained independent legal advice?
- Is there a written arrangement for your release or repayment?
We help companies and directors review financing arrangements, director obligations and related corporate secretarial records. Contact us to arrange a discussion.
This article is for general information only and is not legal advice.