What steps do you take to ensure a guarantor enters into a guarantee of its own free will? A recent case has rendered void a lease guarantee as a result on undue influence exercised over the guarantor. See Trustees of Beardsley Theobalds Retirement Benefit Scheme v Yardley [2011] EWHC 1380 (QB).
“[This] was unquestionably a transaction which Mr Yardley [the guarantor] should have been advised was one that he should first take independent legal advice… and should not have been asked to sign the document until he had taken that advice or had clearly given informed consent not to take it. Those decisions could only reasonably have been taken by Mr Yardley if he had been given full information about the proposed transaction and the risks that he might run if he agreed to be a guarantor.”
“[The landlord] should therefore have checked that the proposed guarantor was financially sound, aware of the risks being undertaken and in full agreement with the proposal that he was to guarantee the rent for a fifteen-year period. The guarantor should have been asked to acknowledge in writing that he was fully in agreement to become a guarantor and had been made aware of the risks of signing the guarantee. He should also have provided… a signed acknowledgement from a solicitor that he had been given appropriate advice before agreeing to sign or a signed waiver of the need to take such advice.”