“Let’s FaceTime later?” – “WhatsApp me ok?”- “Drop me a Snapchat?”
Almost overnight these once alien terms for communication are commonplace for how we converse with each other in 2019.
£1.2 billion people worldwide use WhatsApp, with 35% of UK users using the communication tool daily. Skype has 600 million users worldwide, and is more frequently used for business, with new features allowing the transfer of files and cheap international call and conferencing features.
However, when it comes to the giving of personal guarantees, and specifically the provision of independent legal advice, it appears we are still back in the previous century.
When a lender asks for a personal guarantee, it usually comes with the requirement that the proposed guarantor seeks independent legal advice. The reason for this is to avoid any suggestion of undue influence.
When a person has guaranteed or given security for somebody else’s loan, and was induced to do so by the ‘undue influence’ of the principal debtor, the security or guarantee may be unenforceable by the lender.
Case law* makes clear that a lender is put ‘on notice’ of undue influence if there is a non-commercial relationship between the guarantor and borrower. In these circumstances, lenders will almost always require the personal guarantor to seek independent legal advice to provide comfort to the lender that: