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. The agreement consisted of some 22 pages. Neither at the time of signing the agreement nor on the lead up did up to its execution did P explain to N that it incorporated a personal guarantee for the Company’s debts to P arising under the agreement which N signed at the offices of P. P subsequently made demand on N and followed that up with a county court action to recover £22,000.
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. The element of the agreement relied upon by P as a guarantee consisted of some three lines 18 pages into the agreement. 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 N argued that P had wilfully concealed or had attempted to conceal the secondary nature of the agreement and no effort had been made by P to draw the purported guarantee to N’s attention. Consequently, P accepted £2,000 in full and final settlement.