Enforceability of Guarantor Agreements

//Enforceability of Guarantor Agreements
landlord advice uk abbas v amigo loans

Enforceability of Guarantor Agreements

Landlord Advice UK assisted a guarantor to an Amigo Loan agreement to defend a claim brought against them for the failure of the borrower to pay back the loan to Amigo Loans.

Guarantor loan provider Amigo Loans, which markets itself as a loan option for people with bad credit, has had a recent claim against a guarantor dismissed by a District Judge. It was found that the company had breached principal obligations under the Consumer Credit Act 1974. This has resulted in the guarantor agreement being deemed unenforceable.

Amigo Loans was seeking a guarantor, Miss Abbas, to pay debt in excess of £5,000. Miss Abbas agreed to be the guarantor of a close friend who later left the UK and did not return or pay back the loan to Amigo Loans. Consequently, Amigo Loans issued proceedings against Miss Abbas. The Amigo Loans Limited v Abbas trial took place at Reigate Country Court on 14th September 2016. 

Landlord Advice UK argued that there was a wholesale disregard by Amigo Loans of the requirements of lenders set out in the Credit Consumer Act 1974. In particular, the guarantor agreement was different to the borrowers agreement and the guarantor was never provided with a copy of the borrowers agreement or provided with any notice of their legal rights to terminate the contract.

Initially, Amigo Loans believed that Miss Abbas was not entitled to a copy of the borrowers agreement due to data protection laws. Amigo Loans failed to serve a cancellation notice on the guarantor and argued that a guarantor was not entitled to a cooling off period.

The matter was then called back into chambers before the District Judge who proceeded to dismiss the claim and refused Amigo Loans permission to appeal.

Amigo Loans did not attend the court but was represented and submitted a witness statement as evidence. The District Judge Beck advised that the evidence was heavily disputed on a point of law before adjourning the hearing so the Claimant’s representative could take instructions from Amigo Loans.

District Judge Beck concluded that the guarantor agreement could not be enforced because there was no evidence that a copy of the borrower’s agreement was provided to the guarantor. The guarantors agreement did not reflect the terms of the borrowers agreement and in effect the guarantor did not know exactly what she was providing a guarantee for.

Sasha Charles,  of Landlord Advice UK, said:

“The case highlights the poor conduct of Amigo Loans and their failure to protect consumers as required. The conduct of Amigo Loans puts guarantors at an unfair disadvantage due to non-compliance as the guarantors are not notified of their statutory rights which is required by the Consumer Credit Act 1974. ”

Though this case was of course not property related, but it highlights the obvious importance of ensuring a guarantor is receives a copy of the agreement under which they provide a guarantee. If the guarantor signs a guarantor agreement, but does not have a copy of the agreement they provide a guarantee under, common sense prevails. – The guarantor cannot be liable to comply terms they have never been given a copy of.


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