Posted by Elizabeth Gore-Jones
on 7 February 2024
BACKGROUND
The recent New South Wales Supreme Court case Lee v ATL (Australia) Pty Ltd [2023] NSWCA 327 found that a guarantor was not liable to a lender under a loan deed where that deed had been amended by a side letter between the borrower and the lender which did not include the guarantor.
The Court found that the guarantor was not liable to the lender at all.
TAKEAWAY
If a franchisor is agreeing to vary the terms of a franchise agreement or related document, it should ensure that the franchisee’s guarantors are also a party to that variation or the guarantors may be released in their entirety from any liability.
This will of course depend upon the facts of each case.
Do not fall into the trap. Contact us for expert legal support and peace of mind.
Author:Elizabeth Gore-JonesAbout: Elizabeth specialises in franchising law. She lectures at Bond University PLA in franchising, she sits on the Queensland Law Society Franchising Committee, she is a past member of the Women in Franchising committee and a past member of the Franchise Council of Australia.
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