Guarantees & The Purview Doctrine by Morton Fraser Solicitors

GUARANTEES & THE PURVIEW DOCTRINE - AN UNHELPFUL ENCROACHMENT INTO COMMERCIAL TRANSACTIONS

Authored by Ross Caldwell

I. INTRODUCTION It has long been a principle of Scots law that a guarantor (or in proper Scottish legal parlance, a "cautioner") will be discharged from his or her liability under a guarantee (or a "cautionary obligation" in that same parlance) if the underlying contract or arrangement to which the guarantee relates is amended or altered in a material manner without the consent or knowledge of the guarantor1. This is entirely in keeping with the English law in this area, which is known as the "rule in Holme v Brunskill2". Under both the laws of England and Scotland, the guiding principle is that it is for the guarantor to determine whether he or she wishes to continue to be bound under the terms of the guarantee in respect of the amended or varied contract (assuming that such amendment or variation is not obviously immaterial).3 The principle behind this rule is clear and it is not 1

difficult to ascertain the mischief which it is intended to address - a guarantor cannot be taken to have guaranteed performance of a substantially varied or amended principal contract or arrangement which imposes more onerous obligations on the principal obligor (and therefore the guarantor) without having acquiesced in the amendment or variation and agreed to continue to be so bound. It is for this reason that the practice has developed amongst finance lawyers to adopt two protective strategies when acting for the beneficiaries of any guarantee: 1. first, to ensure that the deed of guarantee itself is drafted carefully to contain language that makes it clear that the guarantor's obligations extend to the principal contract as amended or varied (however fundamentally); and 2. second, to take deeds of confirmation from guarantors whenever an amendment or variation

is intended to the principal contract, under which the guarantor expressly agrees that his or her liability under the guarantee continues to apply to the amended or varied contract. However, the English courts have developed a further legal principle in this context which is known as the "purview doctrine". The purview doctrine is quite similar to the rule in Holme v Brunskill, but it is different and it adds an additional layer of protection for guarantors in an amendment or variation scenario. In essence, the purview doctrine takes effect so that an amendment or variation to a principal contract will only bind a guarantor if the contract as amended or varied remains within the purview of the guarantee as originally drafted. Accordingly, even if the guarantor consents to the amendment or variation and agrees to continue to remain bound under the guarantee accordingly and even if the www.morton-fraser.com

guarantee contains saving language in the nature of that specified in paragraph 1 above, the purview doctrine may intervene so that, in effect, the varied contract is regarded as an entirely new contract which is outside of the purview of the original guarantee such that an entirely new guarantee is required and the guarantor is wholly or partially discharged under the original guarantee. It is not clear whether the purview doctrine finds equal effect in the laws of Scotland, being thus far a development of the English courts. However, given that there are so many similarities between the laws of England and Scotland as regards guarantees and the circumstances in which a guarantor will be discharged4 , and given further that English case law is persuasive in the Scottish courts, it would be prudent to assume that the purview doctrine will find effect in our laws. This article will therefore explore the development of the purview doctrine in English law and will argue that, in a commercial context at least, this doctrine has developed guarantor protection too far (insofar as it purports to create a legal doctrine which goes beyond an analysis as to the correct contractual interpretation of the relevant documentation) creating very real and material difficulties for finance lawyers and practitioners generally, and, what is infinitely worse, for beneficiaries under guarantees and third party security. Such difficulties add unnecessarily to the time and expense involved in implementing

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restructuring and amendment & restatement transactions in a financing context. The article will also explore and analyse the unwelcome incursion of the purview doctrine into the realm of true "all monies" guarantees and security, throwing the efficacy of such collateral into doubt in the context of amended, replaced or new principal documentation. II. THE PURVIEW DOCTRINE The leading case in the judicial development of the purview doctrine dates from 1937 and is a judgment of Lord Atkin in the House of Lords in Trade Indemnity Co Ltd v Workington Harbour and Dock Board5 ("Trade Indemnity"). The more recent leading cases reached the Court of Appeal and they are as follows:

• Triodos Bank NV v Dobbs6 ("Triodos"). • CIMC Raffles Offshore (Singapore) Ltd and another v Schahin Holding SA 7("CIMC

Raffles"). 1. Triodos Triodos involved a guarantee given by a director of a company in respect of a series of loans which that company borrowed from Triodos Bank NV. The original loan agreements entered into by the company and Triodos in 1996 were replaced by subsequent loan agreements in 1998 which were essentially in the same form as the 1996 loan agreements, but which made certain amendments to the terms of the debt due, including a rescheduling of the payment terms pursuant to the first 1998 loan agreement and a tripling of the indebtedness made available to the borrower under the second 1998 loan agreement. In 1999, the loan agreements of 1996 and 1998 were replaced with a new "facility agreement" in completely different form to the previous loan agreements under which various ancillary collateral and supporting finance

documents were also signed and delivered to the bank and the indebtedness was increased from £1,600,000 to £2,600,000. The guarantee itself contained a savings provision under which the bank was permitted to "agree to any amendment, variation, waiver or release" in respect of the original 1996 loan agreements. The Court of Appeal held that the first of the two replacement loan agreements in 1998 was a variation as opposed to a new agreement since its effect was merely to vary the repayment terms under the original 1996 loan agreements. However, the second 1998 loan agreement was more than a mere variation since it more than tripled the monies advanced to the borrower and also enlarged the purposes for which the borrowings could be utilised. The Court of Appeal held further that the 1999 facility agreement was very obviously a new agreement rather than a mere variation. Accordingly,

the director was successful in his case to the effect that he could not be regarded as bound under the guarantee pertaining to the 1996 loan agreements since those agreements had been replaced in 1998 and 1999 with new agreements for which a new guarantee was necessary. This is despite the fact that, as a director of the company in question, he was arguably on notice (constructively at least) and aware that the replacement loan agreements in 1998 and 1999 contained statements to the effect that the guarantee remained in force and applied to the new agreements. In so holding, Longmore LJ (who delivered the leading judgment in the case) referred specifically to the following paragraph contained in Rowlatt's Law of Principal and Surety (1898 edition): "… it is apprehended that assent, whether previous or subsequent to a variation, only renders the surety liable for a contract as

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varied, where it remains a contract within the general purview of the original guaranteeâ&#x20AC;Ś If a new contract is to be secured there must be a new guarantee." Longmore LJ noted that this paragraph was adopted by Lord Atkin in his judgment in the House of Lords in Trade Indemnity and that the paragraph appears in the subsequent print editions of Rowlatt (published in 1926 and 1999). He therefore concluded that this enunciation of the purview doctrine "is still law". Now, were it not for this judicial adoption of Rowlatt's passage, the Triodos case might be regarded as of little import since it seems obvious that the original loan agreement was indeed replaced (as opposed to being merely altered, amended or varied) by the subsequent loan agreements. It is an obvious example of a scenario where it would be unjust to hold that a guarantor remains bound under the original guarantee given the vertiginous escalation of the principal debt due. However, the fact that Rowlatt is adopted in this manner without a detailed enunciation of the circumstances in which an amendment or a variation will be so material in nature as to result in a new agreement clearly gives rise to uncertainty in the law, since practitioners cannot be sure where the line is drawn, a fact which Longmore LJ himself acknowledges in his judgment: "It is, indeed, not easy to draw a hard and fast line between permissible and impermissible variationsâ&#x20AC;Ś.."

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This is in some ways understandable since a detailed enunciation of the law in this area was not necessary to dispose of the particular case in front of the court, being perhaps an obvious example of a set of circumstances in which new principal agreements were created. Nevertheless, the uncertainty is not helpful in the context of commercial transactions. Indeed, it is not immediately obvious why a director, being a commercial man and the directing mind of the company, should be regarded as being in need of the protection of the court in this manner. This is particularly so when there appears to be consent to the amendments / replacements and the continued efficacy of the guarantee through the acceptance of the relevant loan documents acting as director of the company and borrower, which made it clear that the guarantee was to remain as good collateral for the bank. 2. CIMC Raffles This case involved contracts for the construction and sale of semi-submersible oil-rigs to buyers who then intended to lease the rigs to Petrobras. The build project ran into delays which resulted in various amendments being made to the underlying construction agreements at various stages which rescheduled the payment instalments due to the builders so that a number of instalments were deferred until after the rigs were built and increased substantially. The lenders to the project were nervous about the rescheduling of the instalments in this way, foreseeing possible inter-creditor tensions developing in the future between the lenders and

the builders of the rigs, and they accordingly insisted that the holding company of the buyers had to deliver-up a guarantee to the builders guaranteeing payment of the rescheduled instalments. Certain of the amendments to the construction agreements were made after the date on which the guarantee was given and these amendments increased the guaranteed instalment payments by around 40%. The guarantee document itself contained anti-avoidance and savings wording of a fairly robust nature which purported to: 1. exclude the rule in Holme v Brunskill by expressly contemplating that the underlying documentation and the guaranteed instalment payments may be amended or varied; and 2. exclude the usual legal and equitable defences available to a guarantor by stipulating that the guarantor was liable as a principal obligor through an indemnity provision, albeit qualified so that the amount recoverable from the guarantor as principal obligor could not exceed the amount which would have been recoverable from the guarantor on the basis of the guarantee provisions. The Court of Appeal considered the purview doctrine in some detail and conducted a thorough analysis of the case law, including the Trade Indemnity and Triodos cases referred to above. The court was able to distinguish the Triodos case on its facts, although in so doing Rix LJ referred specifically to criticism of the Triodos judgment in Andrews and Millet Law of Guarantees (6th edn, 2012) pp 166-167, largely on the basis that

the court in Triodos ought to have given detailed guidance as to "where the line is likely to be drawn in the future between those variations to the principal contract which would be regarded as falling 'within the purview' of the original agreement, and those which fall outside it". In the course of his judgment, Rix LJ appeared to be in two minds as to whether the purview doctrine is anything more than a question for the interpretation of the guarantee in question or whether it goes further than that as per the judgment of Longmore LJ in Triodos. In any event a decision on this was not required because Rix LJ felt able to conclude that, as a matter of the contractual interpretation of the guarantee, the guarantor was not liable since the guaranteed obligations were clearly limited to the instalment payments originally specified and not as amended. However, Rix LJ did not exclude the possibility that the purview doctrine goes further than a mere matter of contractual interpretation, extending beyond that so that the assent of a guarantor to an amendment may not exclude the overriding or discharge of the guarantee. Accordingly, we must assume that this remains the law regardless of the criticism which Triodos has attracted. CIMC Raffles has also established that typical guarantee savings provisions and principal obligor language will not necessarily save a guarantee from the effects of the rule in Holme v Brunskill or the purview doctrine or, indeed, any other legal or equitable protections which may be afforded to a guarantor. This language is common in all well drafted guarantees 4

and has been refined into a market standard position by the Loan Market Association in the guarantee language comprised in its facility agreement templates. Whilst the courts don't appear to be saying that such language is entirely redundant, they are illdisposed to consider that it can take effect as a sort of consent blanket thrown over all future amendments or replacements of principal contracts, or to discharge the legal and equitable protections that are otherwise afforded to guarantors. This is the case even in a commercial context such as those under consideration in the Trade Indemnity, Triodos and CIMC Raffles cases. III. THE EXTENSION OF THE PURVIEW DOCTRINE TO "ALL MONIES" GUARANTEES An "all monies" guarantee is one in which the guarantor agrees that it will guarantee payment of all present and future monies and liabilities which may be owed now or at any time in the future by 5

a principal to its creditor. Such guarantees are not limited to sums arising under a specific contract or agreement, but are instead for "all monies" present and future and howsoever arising. Guarantees for "all monies" are often taken by the clearing banks in the context of group-wide funding arrangements, particularly in the SME market, where all companies in the group cross-guarantee each other on an "all monies" basis. The benefit of this from the borrowing group's perspective is that it in theory means that loan agreements and credit facilities can be amended or provided on an on-going basis without any requirement to refresh the guarantee and security package on each occasion thereby cutting down on the cost and delay of implementing such credit arrangements. Nevertheless, it remains prudent practice to seek a formal consent from the guarantors and security providers if a principal credit

agreement is to be amended or an entirely new line of credit provided. However, this is thought to be a "belts and braces" approach which need not be necessary in the context of a well drafted "all monies" guarantee. Some doubt has now been thrown on these assumptions as a result of the case of Dowling v Promontoria (Arrow) Ltd8 ("Dowling"). The Dowling case involved a judgment of the Bankruptcy High Court by Registrar Barber. It therefore does not have the authority of the House of Lords and Court of Appeal judgments analysed previously. That said, the case involved an "all monies" guarantee given by an investor in a principal company who, whilst neither a director or shareholder of the principal company, gave the guarantee nevertheless in order to put some "skin in the game" in terms of the underlying property financings to which the guarantee related. Under the terms of the guarantee, the guarantor was liable for

payment of: "all and any sum or sums of money whether actual or contingent in whatever currency denominated which are now or shall at any time be owing to the Bank on any account whatsoever from the Principalâ&#x20AC;Ś" The guarantee was therefore framed very widely as a true "all monies" instrument, although the recitals to the deed made reference to a specific facility letter entered into between the principal and the lender at the outset and stated that it was a term of that facility letter that the guarantee be entered into. After the guarantee was entered into, the principal borrower and the lender in question then entered into a second facility letter and it was conceded by counsel during the case that this second facility letter was a "freestanding facility" rather than an amendment. The guarantor argued successfully that the second www.morton-fraser.com

facility letter was not within the purview of the original guarantee and therefore the guarantor was discharged since the second facility letter, being an entirely new contract, required a new guarantee. Registrar Barber referred to both the Triodos and CIMC Raffles cases in so holding, and yet neither of those cases involved "all monies" guarantees, but rather guarantees which were expressed to relate to specific principal documents and obligations, and so it is not entirely clear why those cases were not distinguished accordingly by the court. This appears to be on the basis that the court took the view that the guarantee in Dowling was not a true "all monies" guarantee despite the clear wording to that effect in the deed itself. It is submitted that this case was wrongly decided and has now thrown standard financing practices in terms of "all monies" guarantees and collateral into considerable doubt. In Dowling, the guarantor (a commercial person and investor in the underlying company) signed-up to a guarantee which was clearly drafted as an "all monies" instrument. The beneficiary of the guarantee no doubt erred in not seeking confirmations from the guarantor when the new facility documents were put in place, although it is not clear from the judgment that this would have saved the guarantee given the application of the purview doctrine by the court. IV. HAS THE PURVIEW DOCRINE GONE TOO FAR? It is the opinion of the author that the purview doctrine has gone too far in terms of its encroachment into dealings between www.morton-fraser.com

commercial persons and the ordinary approach of the courts in a commercial context in which the intention of the parties as specified in the contracts made between them should be given effect to. It is not difficult to understand why legal principles such as the rule in Holme v Brunskill and the purview doctrine have developed in the context of personal guarantees given by natural persons who may or may not understand the nature of the underlying commercial transaction which they have been asked to support. The classic example which arises with alarming frequency throughout the case law is that of the company director who has his or her spouse deliver up a guarantee and/or a charge over the matrimonial property in support of the liabilities of the company. Clearly, such persons may be vulnerable or they may not understand what they're being asked to sign, hence why properly advised and prudent lenders now require that independent legal advice letters are deliveredup by independent legal advisers in accordance with the so-called Etridge procedures9 However, the extension of legal principles such as this almost without limitation to commercial persons and corporates seems to the author at least to be taking the protections too far.

guarantee was to continue to apply to the indebtedness arising under those new documents. Clearly, Triodos Bank made a terrible error in not obtaining formal consent from the guarantor in the form of a deed of confirmation or otherwise at least, but even had it done so, the judgment of Longmore LJ is such that the guarantee would probably still have failed because the new facility agreements were not within the purview of the original guarantee document. As stated previously, Triodos is perhaps at the very outer boundaries of what could be regarded as a permissible alteration since the debt was first of all more than tripled and then increased again by a further 62.5% pursuant to the subsequent loan agreements. But it has set a precedent across a very broad range of alterations and amendments which may or may not be permissible in the context of the purview doctrine.

Let's take Triodos as an example, in that case the guarantor was a director of the company which incurred the indebtedness which he guaranteed. As a director of the company, he was presumably therefore aware of the amended facility agreements which were entered into and which specifically stated that the

1. first - Where the principal debt due is increased and such an increase is contemplated by the credit agreement in its original form - for example, if a credit agreement contains an "accordion option" under which additional monies can be advanced subject to a borrowing limit and

In his article on the purview doctrine published in the Butterworths Journal of International Banking and Financial Law10 , Richard Salter QC analysed the pertinent case law and reached the following conclusions as to amendments which should or should not be regarded as requiring a fresh guarantee and/or supplemental security:

other conditions, then an increase in borrowings within those terms would not typically require a fresh guarantee or supplemental security. The corollary of this, of course, is that if a debt increase is not so contemplated then fresh guarantees and supplemental security (or at least a confirmation, depending upon the circumstances) should be taken. 2. second - Where the variation involves anything that might plausibly be described as a replacement of the original credit agreement, a fresh guarantee and supplemental security (or at least a confirmation, depending upon the circumstances) should be taken. 3. third - Where the purpose of the facility is varied then lenders should consider requiring fresh guarantees and supplemental security (or at least a confirmation, depending upon the circumstances). 4. fourth - Where any amendment is made that is not contemplated by specific provisions in the underlying credit agreement then lenders should consider requiring fresh guarantees and supplemental security (or at least a confirmation, depending upon the circumstances)11. Salter QC goes on to say the following in this regard: "Beyond those extreme cases, it will in every case be a question of judgment: and it will usually be wise to err on the side of caution, particularly where the proposed variation involves very significant or 6

fundamental changes to the terms of the underlying obligation." Quite so, but the reality is that there is an entire kaleidoscope of amendments and variations to principal credit agreements that may or may not give rise to difficulties under the purview doctrine. The author's view is that, given the current state of the law, all that can be said with any certainty is that at one end of the kaleidoscope, there are obviously minor amendments and tweaks (such as varying the ratios in a financial covenant or changing the date for delivery of quarterly management accounts) which are permissible and do not offend the purview doctrine; and at the other end of the kaleidoscope, there are fundamental amendments in which the debt is doubled or tripled or increased by more than 40% at least or new facilities or tranches are added, or the purpose clause is changed or liabilities are novated from one borrower

to another, which are impermissible and will offend the doctrine. Accordingly, the only entirely safe course of action for a lender to adopt where it finds itself somewhere in the middle of this spectrum is to take a new guarantee and / or supplemental security (noting that a confirmation may not be sufficient, depending upon the circumstances). That may be thought to be a relatively minor matter, but once the reasoning is extended by analogy to a scenario involving a large group of companies each of which has provided cross-guarantee support for the borrowers in the group and has charged its assets in support of those guarantees, the process involved in re-taking the guarantees and security so as to avoid any possible challenge based on the purview doctrine becomes time-consuming and costly. Practitioners in financing transactions which are in the nature of a restructuring or an amendment exercise are put into an invidious

position - they must determine whether the original guarantee and security package will remain in effect for the amended or restructured facilities, or whether further protection for the finance parties is required either in the form of deeds of confirmation supported by board minutes and shareholder resolutions (at the very least) or a fresh guarantee and supplemental security package necessitating fresh filings and notifications; and they must do so on the basis of judgments such as Triodos and CIMC Raffles, which enunciate the purview doctrine as broad principle, but provide little guidance on the nature and extent of amendments which will or will not cross the line as far as the purview doctrine is concerned. The almost irresistible temptation for practitioners in such transactions is therefore to err on the side of caution and recommend that replacement guarantees are taken and supplemental security granted, particularly where the extension of new monies is part of the

amendment or restructuring package even if such new monies comprise a comparatively small percentage of the initial debt package. The author accepts that there must be some limitation on the extent to which guarantees and security which are specific to particular principal contracts and obligations can continue to be binding if the original contracts are substantially amended or replaced, but where the guarantees and security have been given by corporate entities or commercial persons (directors, shareholders, investors and the like), there must surely be a presumption that they remain bound in the absence of a very clear contractual or contextual interpretation that they are not so bound. It is submitted that it is in this commercial context that the purview doctrine goes too far to the extent that it cuts across clear and unambiguous savings provisions contained in

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the guarantee or security deed itself and can even cut across an assent given to the amendment, variation or replacement contract in a properly drafted deed of confirmation, which should, in the author's opinion, only be countermanded in very precise or extreme circumstances. It is difficult to understand exactly why the intention of such commercial parties as set forth in the specific terms of the documentation should be supplanted in this way or why such commercial entities and persons are thought to be in need of this sort of protection. There ought to be certainty in the law and, if the courts are going to extend legal doctrines such as this across the commercial sphere, then the applicable judgments should also contain detailed guidance so that practitioners can provide clear advice to their clients. V. PROBLEMS PECULIAR TO SCOTLAND IN THIS CONTEXT The difficulties caused by the purview doctrine in a commercial context become more acute north of Hadrian's Wall. This is as a result of the relative inflexibility of our property laws in terms of the creation of real rights in security. Whereas English law has the

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concept of "equity" which provides a great deal of flexibility and allows parties to create security over different asset classes with comparative informality, Scots law insists that the formalities prescribed by law must be followed or there will be no security at all. In an English context, it may therefore be no great hardship to take a supplemental security package over the assets of a company since the supplemental security will take effect in equity if not at law - thus, for example, if a second assignment of a book debt was taken in order to supplement an original security assignment duly intimated to the underlying debtor, then the second assignment would take effect as a second priority equitable charge. Contrast that with the position in Scots law where a book debt has been assigned in security as part of the original financing and that has been intimated to the underlying debtor (as it must be to create the security) - the book debt cannot be assigned a second time whether on a supplemental basis or otherwise. Accordingly, if an amendment or restructuring is thought to

have possibly prejudiced the original assignation in security as a result of the purview doctrine then the only option available to the secured creditor is to unwind the original assignation in security and have this reconstituted as a completely new assignation in security through the following steps: 1. Signing of a retrocession of the book debt back to the assignor under the original assignation in security. 2. Service of formal intimation of that retrocession on the underlying debtor. 3. Signing of a fresh assignation in security under which the book debt is assigned back to the secured creditor. 4. Service of formal intimation of the fresh assignation in security on the underlying debtor. 5. Registration of the fresh assignation in security at Companies House (where the assignor is a company or an LLP). Not only is this an extraordinarily convoluted process, but it will be seen also that the secured creditor has essentially dispensed with established security which may be

hardened, or substantially progressed towards a hardened position at least, under the relevant challengeable transactions laws as set out in the Insolvency Act 1986 and the related common law12 . It is the view of the author that the secured creditor has more than likely "thrown the baby out with the bathwater" here in an attempt (perhaps misguided) to err on the side of caution because of the uncertainty caused by the lack of clarity around the full nature and extent of the purview doctrine. VI. CONCLUSION The purview doctrine is too long established in law and by high authority to be disregarded as entirely unsuitable to modern commercial practice. It is the law and it must be reckoned with. However, the courts should not abrogate themselves of the responsibility to provide guidance as to its true nature and extent. Practitioners find themselves in an almost impossible position when advising on the law in this area and the natural inclination is to advocate for a cautious approach since a clean opinion in most cases simply cannot be given on whether the amendments or

variations in question do or do not cross the line insofar as the purview doctrine is concerned. The position then becomes increasingly intolerable, cutting across standard financing practice in the process, if the purview doctrine is to be held as extending equally to true "all monies" collateral in a commercial context per the Dowling case. It is to be hoped that the courts will develop a new line of principle in this regard which allows for a more flexible approach in the context of guarantees and security given by corporate entities or commercial persons.

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10. Richard Salter QC, 1. See Bells, Principles of Syndicated lending and the Law of Scotland, the "purview doctrine": ยง 259; Allan Buckley how to preserve Alan & Milne v Pattison guarantees when (1893) 21 R. 195 and N.G. varying the guaranteed Napier Ltd. v Crosbie obligation (2017) JIBFL (1964) S.C. 129. 459. 2. (1878) LR 3 QBD 495. 11. Salter QC references, 3. In this context, it is by way of example, worth noting at this provisions in the Loan stage that the analysis Market Association in the relevant cases facility agreement is thought to apply templates which equally to proprietary contemplate that the security which is given parties may change by a "third party" in pursuant to contractual support of the liabilities mechanisms set forth of another person (for in the documentation example, a standard and that specified security or a legal amendments may be mortgage). Accordingly, made with varying in this article, the levels of creditor term "guarantee" approval, stating that includes any such third amendments that fall party security and within the clauses as so "guarantor" should be contemplated should construed accordingly. be permissible. 4. For example, English 12. Insolvency Act 1986, law and Scots law ss 238 (Transactions at share the "rule in an undervalue (England Holme v Brunskill" for and Wales)), 239 all practical intents (Preferences (England and purposes and and Wales)), 242 both bodies of law (Gratuitous alienations also share the rule (Scotland)), 243 (Unfair that a guarantor will in preferences (Scotland)) certain circumstances and 245 (Avoidance be discharged if a coof certain floating guarantor is released charges). or if significant time or forbearance is given to the principal obligor to make good under the principal contract. 5. [1937] AC 1. 6. [2005] EWCA Civ 630. 7. [2013] 2 All ER (Comm) 760. 8. [2017] All ER (D) 82 (Sep). 9. Per Royal Bank of Scotland plc v Etridge (No 2) [1998] 4 All ER 705 www.morton-fraser.com

To discuss further, please contact:

Ross Caldwell DDI: 0131 247 1149 EMAIL: ross.caldwell@morton-fraser.com

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