As a business matter, a lease guaranty is almost always intended to be enforceable “come heck or high water,” no “ifs, ands or buts.” In a particular situation, that might not turn out to be the case, but that’s what people expect. But saying “no ifs, ands or buts,” doesn’t mean that any particular guaranty covers all circumstances for all of time. They are defined by their scope and can be limited by amount or time. We’ve written about limitations before and we’ll try not to cover that ground today. If any reader is interested, those earlier blog postings can be seen by clicking: HERE and HERE.
Today, we’re going to raise some kinds of things that could let a guarantor off the hook, in which case it wouldn’t matter how “tight” the guaranty was written. Regardless of whether space permitted, we couldn’t list every set of circumstances that could cause that result, even if we were good enough to know them all. So, we’ll just lay out some principles. Hopefully they will sensitize readers such that they will be able to look at any situation and know whether there is a possibility that the guaranty will turn out to be nothing more than a used piece of paper. [Read more…]