Personal Guarantee made whilst mentally ill

TobyDog

This is a bit complicated.

A few years ago I started a Ltd company that was turning over pretty decently. I was a director in addition to my partner. 4 years ago the stress of running the company and trying to expand resulted in my mental health failing. As a result I relinquished the directorial responsibility in favour of someone else. I carried on working for the company and we tried to expand by leasing vehicles in order to travel to dealers to make sales.
A couple of years ago we took on a very expensive car lease for a salesman. One of the directors already had a PG on another vehicle and the other had no credit rating at all so I was used the PG for that car. To cut a long story short this PG was made whilst I was on record with my local GP and mental health services as being clinically depressed and on fast-track treatment for CBT - I was considered a suicide risk at the time. My memory of those few months between getting diagnosed badly and getting the treatment are sketchy to say the least - my brain has simply ignored a huge amount of time although I'm a lot better now.

The thing is I don't remember signing the PG or even being asked to do so, but it seems that I have. In all probability I'd have signed my own death warrant if it had been put in front of me at the time. This PG isn't being called yet but the company may have to fold and the car has an appalling resale value because it's one of the VW emissions cheats. Is this guarantee actually enforceable should the worst happen?

[Deleted User]

Yes. It would only be called in question if they were aware of your illness and they continued to allow you to enter into the agreement.

Otherwise, they have not acted inappropriately.

poppasmurf_bewdley

You really need to speak to a solicitor who specialises in that area.

You can't expect a forum to provide specialised legal advice on such a personal subject.

Arleen

The only way for this guarantee to be invalid if you did not possess the mental capacity to sign at the moment of signing it. You didn't mention any doctor ruling that so it's going to stand.

Brock_and_Roll

I am afraid ZX is right, the finance company cannot possibly be aware of your personal medical condition unless at the time of signing you disclosed it to them, someone else had an enduring power of attorney over your at the time, or it was blatantly obvious to any reasonable person that you did not have full capacity.


In a nutshell, the Mental Health Act 2005 assumes that an adult has the capacity to make a contract unless it can proved otherwise - proving that someone had "no capacity" at a particular point in the past is obviously not easy.

GarthThomas

One way to look at situations like this is to ask who should be taking the loss, and why. You claim that you had reduced capacity, but you did not share this information with the finance company and agree between you that it was worth the risk, they knew nothing at all, so how would it be reasonable to ask them to lose money because of your actions.

If, in a state of limited capacity you borrowed a friend's car and damaged it would you be taking the same approach "not my fault mate, you're wearing it"? The same applies here. You made a terrible decision, for you, because you were unwell, but this is no reason to now say that an innocent party should bear the costs of your illness.