Template:Continuing guarantee description: Difference between revisions
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A [[continuing guarantee]] is one where the [[guarantor]] assumes liability for all the [[debtor]]’s past, present and future obligations to a [[creditor]]. Even where the amount owing has been paid in full, the [[guarantor]] can still be liable under the same facility if there is a subsequent indebtedness. This is useful for revolving credit facilities and other forms of [[indebtedness]] with a “now you see it, now you don’t” sort of a flavour to them. | |||
This is to overcome a principle articulated in {{casenote|Devaynes|Noble}} that payments are presumed reduce debts in the order in which the debts are incurred. | This is to overcome a principle articulated in {{casenote|Devaynes|Noble}} that payments are presumed reduce debts in the order in which the debts are incurred. | ||
Latest revision as of 14:35, 27 June 2018
A continuing guarantee is one where the guarantor assumes liability for all the debtor’s past, present and future obligations to a creditor. Even where the amount owing has been paid in full, the guarantor can still be liable under the same facility if there is a subsequent indebtedness. This is useful for revolving credit facilities and other forms of indebtedness with a “now you see it, now you don’t” sort of a flavour to them.
This is to overcome a principle articulated in Devaynes v Noble that payments are presumed reduce debts in the order in which the debts are incurred.