Indemnity hidden within wording of document

 

FACTS

N’s Company was incorporated in 2006. In 2011 N sought financial services from P and signed an agreement accordingly for and on behalf of the Company. On signing the agreement, and at no time leading up to the agreement, P did not enlighten her to the obligations to which she was signing up to. Indeed, the alleged indemnity was hidden in the latter pages of the agreement.

Of course, indemnities are more onerous than personal guarantees in that an indemnifier can be deemed to be the same as the Company in terms of contractual obligations.

N’s Company went into liquidation and P issued proceedings against N for the alleged debt of £22,000.

OUTCOME

N entered into the agreement on the belief that she was doing so as an authorised signatory of the Company and not in her personal capacity. Therefore the agreement failed as a contract due to the fact that there was no valid offer from N to be responsible for the alleged debt. Furthermore the alleged indemnity was concealed in the end of the agreement and no effort was made to bring it to N’s attention.

Consequently, P accepted £2,000 in full and final settlement.

 

Back to Case Studies