I just received a letter from a solicitor about a personal guarantee I have no knowledge of

cheexy

I'm hoping someone can help me, please. My business of 10 years became insolvent and had to go into liquidation earlier in the year. I had to lay off my staff and give up the premises, and it has been one of the most traumatic experiences of my entire life. 

I used personal credit cards when I was trying to save the business and currently have no income, and I am on Universal Credit. I have been holding on because of my little one. 

Today, I received a letter in the post from the solicitors of one of my company's creditors who are alleging that I agreed to a personal guarantee. The amount is just over £2,500.

 I don't remember signing a separate personal guarantee. However, I just looked at the registration form and can see a hidden sentence there, right at the bottom of the terms and conditions of sale page that states,

"In the event that a Limited Company is unable to meet its liability in respect of our fees as and when they fall due, then the companies directors are personally, jointly and severally liable in respect of any outstanding balance."

 It is a 2 paged document with my company details with my signature on the first page and the 20 bullet list of terms and conditions on the second page. The sentence is the 19th bullet point.

The letter came in a pack, which includes a pre action form.

Could someone let me know if this is enforceable? I am deep into my overdraft, have no savings whatsoever, and I have defaulted on all my credit cards. My mental health is hanging on by a thread, and this letter has sent me into panic mode.

Also, what should be my next steps? 

Thanks for reading.

molerat

IMO that clause is not worth the paper it is printed on.  The bullet pointed clauses can hold the company liable to whatever they state, as that is the body that you signed as, but the whole point of a limited co is that the directors are not liable unless a separate deed is signed and witnessed and each director would have to give their express signed consent.  Looks like another case for a reply as given in Arkell v Pressdram (1971).

fatbelly

A court would have to decide. However there is no court claim as yet so I suggest that you be more diplomatic than telling them to F Off.

Respond to the preaction form as in the guidance

https://debtcamel.co.uk/letter-before-claim-ccj/

cheexy

molerat said:

IMO that clause is not worth the paper it is printed on.  The bullet pointed clauses can hold the company liable to whatever they state, as that is the body that you signed as, but the whole point of a limited co is that the directors are not liable unless a separate deed is signed and witnessed and each director would have to give their express signed consent.  Looks like another case for a reply as given in Arkell v Pressdram (1971).

I'm not familiar with a reply as given in Arkell v Pressdram. I'm trying to look it up now. Thank you. 

cheexy

cheexy said:

molerat said:

IMO that clause is not worth the paper it is printed on.  The bullet pointed clauses can hold the company liable to whatever they state, as that is the body that you signed as, but the whole point of a limited co is that the directors are not liable unless a separate deed is signed and witnessed and each director would have to give their express signed consent.  Looks like another case for a reply as given in Arkell v Pressdram (1971).

I'm not familiar with a reply as given in Arkell v Pressdram. I'm trying to look it up now. Thank you. 

I just came back to say that I have understood this reply and found it both hilarious and mood lightening 😂. Thanks again!

sourcrates

Refers to Private Eye, and a certain response to a certain letter about damages lol.

Hilarious yes, a good response to a court claim, well, I`d love to say yes, but perhaps better to go with fatbellys advice on this one.

cheexy

fatbelly said:

A court would have to decide. However there is no court claim as yet so I suggest that you be more diplomatic than telling them to F Off.

Respond to the preaction form as in the guidance

https://debtcamel.co.uk/letter-before-claim-ccj/

Thank you. I'm thinking of including the following cover letter to the reply form. Do yoh think it is necessary? I note that the link doesn't refer to personal guarantees. See below:

RE: Response to Pre-Action Letter – Claim Ref [Reference Number]

Dear [Solicitor's Name],

I acknowledge receipt of your pre-action letter dated [date] concerning the alleged personal guarantee related to the debt of [my company name].

I dispute the existence of any enforceable personal guarantee in this matter. To the best of my recollection, I did not agree to or sign a personal guarantee for the debt in question. The alleged clause concerning personal liability is buried in the 19th bullet point of your client’s terms and conditions, which I was not made adequately aware of when signing the document. My signature only appears on the first page of the document, and no clear reference to the personal guarantee was presented at that time.

To clarify this matter, I kindly request:

A copy of any separate personal guarantee agreement that I am alleged to have signed.

Any correspondence or evidence where this personal guarantee was explicitly discussed with me.

Proof that this clause was adequately highlighted at the time I signed the document.

Furthermore, I am currently experiencing financial hardship and have no income. I am on Universal Credit and have defaulted on my personal debts. Therefore, even if the claim were upheld, I would be unable to meet any payment obligations.

I would be open to discussing this matter further, but I maintain that the claim is unfounded and unenforceable.

Please acknowledge receipt of this letter. I look forward to your response.

Yours sincerely,

[My Name]

fatbelly

How do you feel about running this past Business Debtline?

HillStreetBlues

It is a 2 paged document with my company details with my signature on the first page and the 20 bullet list of terms and conditions on the second page. The sentence is the 19th bullet point. 

So it's possible you were never even presented with page two.

HillStreetBlues

molerat said:

IMO that clause is not worth the paper it is printed on.  The bullet pointed clauses can hold the company liable to whatever they state, as that is the body that you signed as, but the whole point of a limited co is that the directors are not liable unless a separate deed is signed and witnessed and each director would have to give their express signed consent.  Looks like another case for a reply as given in Arkell v Pressdram (1971).

I would have to agree with your view.
The company signed not the OP personally, so I can't see how that company has the legal power to make anyone else libel.
It would need the OP to sign in a personal capacity to guarantee.

cheexy

HillStreetBlues said:

It is a 2 paged document with my company details with my signature on the first page and the 20 bullet list of terms and conditions on the second page. The sentence is the 19th bullet point. 

So it's possible you were never even presented with page two.

I can check my emails to confirm but with losing the business, I doubt that the email address is still accessible due to not renewing the email subscription.