A recent case on guarantees and indemnities has been added to the By Lawyers Deeds and Agreements commentary.
Deeds and agreements for general and specific purposes are provided in every By Lawyers matter plan. The commentary provides assistance with drafting these documents.
In Taylor Square TT Pty Ltd v Kinselas Pty Ltd (No 2) [2024] NSWSC 987 the court considered at [20] – [29] the principles of construction for guarantee clauses, and ultimately ordered specific performance against the guarantor.
The court’s analysis sheds helpful light on the interplay between guarantees and indemnities which is covered in the Deeds and Agreements commentary under the heading Indemnities, guarantees, and warranties. The cases cited include Canty v PaperlinX Australia Pty Ltd [2014] NSWCA 309 which is also included in the Deeds and Agreements commentary as authority for the distinction between a guarantee and an indemnity:
Simply stated a guarantee is a binding promise of one person to be answerable for the debt or obligation of another if that other defaults. The distinctive feature of a contract of guarantee is the secondary nature of the obligation which is assumed by the guarantor. There must be another person who is primarily liable.
In contrast, under an indemnity, a person assumes a primary liability. A contract of indemnity is a contract by one party to keep the other harmless against loss and is not dependent on the continuing liability of the principal debtor. An indemnity is an independent obligation to make good a loss.
The Deeds and Agreements commentary is located in the sub-folder of General deeds, agreements, execution clauses, and statutory declarations that appears in folder A. Getting the matter underway on all By Lawyers matter plans.
A link to the Kinselas case has been added to the drafting tips in the commentary.