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Trade Supplier Personal Guarantees Enforceability Issues

Many trade suppliers, particularly in the building industry, include as part of their trade application forms a personal guarantee (PG) from directors. There was a time when such agreements were so badly constructed that they were very easy to fend off. Still, trade suppliers often won in court as the wrong arguments were put forward, and it wasn’t until we came onto the scene in 2008 to help people with personal guarantee issues, that trade suppliers were put on the back foot and being successfully and consistently challenged on their alleged PGs.

The building trade supply industry rely heavily on such PGs, so gradually since 2012 and for the most part the industry has steadily regained the upper hand, as they often now provide for a signature box for the PG separate from the trade application. Nevertheless, the previous ability to challenge them wholesale persists as a current day myth, as many guarantors continue to be informed they are not worth the paper they are written on, only to find themselves on the wrong end of a costly court judgement.

Firms like Travis Perkins and Graftons Group (now Huws Gray) have over the same period of time purchased rafts of independent building supply firms, and attempted to improve their new divisions’ paperwork in this area.

But there are chinks in the armour for some, if not many, building trade supply PGs. Apart from whether the goods were invoiced correctly in the first place, there are questions around who wrote out the application form and who physically signed the trade application form and personal guarantee boxes. Unwitting company employees often write a director’s name in the PG signature box. Whilst they can commit the company to the expense, they are in no position to commit another individual, even if they are a director. Some of the personal guarantee wording used is misleading, and there can also be issues surrounding those agreements that set out joint and several liability. Furthermore, many independent trade suppliers still use the old style one signature forms.

Even with such contentions, someone with a Travis Perkins personal guarantee or any other building supplier PG can be expected to be chased quite aggressively on a PG claim.

Experience in other non-finance sectors vary considerably, form a two line agreement to a fully blown legal agreements, with differing degrees of enforceability.

If you are being pursued under a trade supplier personal guarantee and need help, please feel free to contact us HERE

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