Builders merchant personal guarantee (Scotland)

[dgt700]

Builders merchant "Credit Account Application Form" had no terms and conditions printed on it or attached to it

but stated "by signing this agreement you are agreeing to accept the terms and conditions of ************,

a copy of which is available on request".

 

I did not suspect there to be any onerous conditions and certainly not a personal guarantee clause,

so I did not request a copy of the terms and conditions.

 

 

It would now appear that under their clause headed "Financial Condition" the following wording appears.

"If the company becomes insolvent or goes into liquidation, insofar as I am a director of a limited company.,

I hereby personally guarantee performance of all the Applicant company's obligations to ************ against all and any losses incurred by them.

I further acknowledge and have had notice that such a guarantee and indemnity obligations will be enforceable against me in my individual capacity".

 

The builders merchant have now raised a small claims action against me for the repayment of £2500,

 

 

do I have any defence ?

 

Please note that the law of Scotland applies.

[Andyorch]

Thread moved to the appropriate forum......

 

Hi dgt700 and welcome to CAG....

 

Perhaps if you could expand on the debt...how it occurred....have you signed as a director of a limited company and acting Guarantor?

 

Regards

 

Andy

[dgt700]

Hi Andy

 

I signed a credit account application form for a builders merchant in the capacity of a sole director of a limited company.

 

 

Unfortunately the company went into liquidation last year.

 

 

There were no terms and conditions available to me at the time of signing

therefore I was not aware of one of their conditions appertaining to a personal guarantee.

 

 

I also did not receive notice that such a guarantee and indemnity obligations would be enforceable against me in my individual capacity.

[dx100uk]

I would think if you didn't see the T&C before signing you have a very good case.

 

 

dx

[Andyorch]

Okay lets deal with the claim.

 

Take a read of the following...its not ideally suited to your claim but if you could respond to the points that are applicable in your case...then we have the details of the claim.

Copy and post your responses here....

 

http://www.consumeractiongroup.co.uk/forum/showthread.php?419198-You-have-received-a-Claim-What-you-need-to-do.-**UPDATED-December-2014**(1-Viewing)-nbsp

 

Regards

 

Andy

[skintandfat]

As a sole trader the company debts are yours anyway, so - unfortunately they have you on that

 

 

How can you the company go into liquidation if you haven't ?

As a sole trader you and the company are effectively the same entity

[Andyorch]

Thread is 7 months old skintandfat

[Ruleoflaw]

This gentleman's situation (although 7 months' old), was operating a Ltd Company as a Director. A limited company has refuge from bankruptcy where he has what is called a legal personality (his legal Ltd Company): Company Act 2006. He also has his individual personality (as non legal company) for which his personal assets cannot be taken were he to go bankrupt. By legal personality it means incorporation as though he were a company insofar as his Ltd Company would be liable for any 'company' assets were an insolvency to occur. On the other hand, he could also have argued that the terms of contract were not incorporated into the contract at common law: as per Denning's ratio in Shoe Lane (1967). A sole trader is company that is not recognised as having a legal personality so is not incorporated.