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Sir Mike, I’m confused about the writing requirement for guarantees. The text states, “The agreement itself need not be in writing but the terms must be evidenced in writing before any action is brought.”
This seems contradictory to me. If the agreement doesn’t have to be in writing, why is written evidence required for it to be legally enforceable? It feels like saying the contract doesn’t need to be written, but if you want to use the contract, it has to be written. Could you please explain the distinction?
Also, does this mean “no” is the correct answer to “Must contracts for guarantees be made in writing?”
Thanks so much for your patience with my many silly questions.
Think of this as reading ‘Must there be a formal written contract of guarantee’ and place emphasis in your mind of the requirement for ‘formal’
No – there is no need for a formal contract. However, there must be sufficient written EVIDENCE to support the claim that a guarantee arrangement exists. Without that evidence in writing, it would be available for any aggrieved person facing bankruptcy to claim that “I had an agreement with Elon Musk that he would guarantee all my debts incurred as a result of my business activities failing”.
If there were no requirement for the contract itself to be in writing nor even a requirement for there to be sufficient written evidence, imagine what a circus that would result in!
And don’t be so dismissive of the silliness of your questions! They aren’t silly and they’re taking me quite some time to get my head round them so that I may explain the situation with sufficient clarity 🙂
OK?
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