Apart from the obvious legal issues in this case regarding validity of signature, it is a useful reminder of the importance of obtaining independent legal advice for guarantors of commercial leases and other legal documents.
A commercial lease is an onerous tenant commitment not just in terms of rental and other outgoings but also for example, in respect of repairing and yield up (returning the property to the landlord at the end of the term) obligations. On tenant default, such breaches can result in enormous liability for an unsuspecting guarantor stretching way beyond the actual rental commitment. In some cases these matters are not given proper consideration in the competition to complete a lease of desirable commercial space.
It would be interesting to review whether independent advice was provided to the guarantor in the Ramsay case or whether the guarantee was negotiated in the absence of separate review by the guarantor's counsel particularly as there is a clear conflict of interest between such parties.
Well advised tenants will seek to avoid providing a guarantor and instead offer a rent deposit to a landlord as security and a means of limiting liability.
I find that when Mr Hutcheson committed Mr Ramsay to the guarantee in the lease of the premises, Mr Hutcheson was acting within the wide general authority conferred on him by Mr Ramsay at all times until Mr Hutcheson's dismissal in October 2010," the judge added.