Fairstate Ltd v General Enterprise & Management Ltd & Anor [2010] EWHC 3072 (QB) (29 November 2010)

Fairstate Ltd v General Enterprise & Management Ltd & Anor [2010] EWHC 3072 (QB) (29 November 2010)

The Guarantee Form is not an effective contract of guarantee enforceable against Mr Sarian because it fails to identify the creditor, principal debtor, and the obligation to be guaranteed, and is so fundamentally defective that neither construction nor rectification can cure its deficiencies. The requirements of the Statute of Frauds 1677 s 4 are not satisfied, and the court cannot create a new contract for the parties. Mr Sarian is not estopped by the recitals in the Management Contract, as he was not a party to that contract in his personal capacity.

Citation
[2010] EWHC 3072
Parties
Claimant: Fairstate Limited; First Defendant: General Enterprise & Management Limited; Second Defendant: Atef Sarian
Jurisdiction
England and Wales
Judgment Date
29 November 2010
Procedural Posture
Civil (contract/guarantee) / Preliminary Issue Trial on Enforceability of Guarantee
Outcome
Claim against Mr Sarian as guarantor dismissed on the preliminary issue.
Legal Topics
Guarantees, Statute of Frauds, Rectification, Misrepresentation, Agency
Contract Law Commercial Law Guarantees Statute of Frauds Rectification Misrepresentation Agency

Case Brief

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Parties

Fairstate Limited

Claimant

General Enterprise & Management Limited

First Defendant

Atef Sarian

Second Defendant

Procedural Posture

Civil (contract/guarantee) / Preliminary Issue Trial on Enforceability of Guarantee

Legal Issues

  1. 1 Whether the Guarantee Form signed by Mr Sarian is an effective and enforceable contract of guarantee under general law and the Statute of Frauds 1677 s 4
  2. 2 Whether the Guarantee Form can be construed or rectified to reflect the parties' intentions
  3. 3 Whether Mr Sarian is estopped from denying the guarantee

Ratio Decidendi

The Guarantee Form is not an effective contract of guarantee enforceable against Mr Sarian because it fails to identify the creditor, principal debtor, and the obligation to be guaranteed, and is so fundamentally defective that neither construction nor rectification can cure its deficiencies. The requirements of the Statute of Frauds 1677 s 4 are not satisfied, and the court cannot create a new contract for the parties. Mr Sarian is not estopped by the recitals in the Management Contract, as he was not a party to that contract in his personal capacity.

Court Disposition

Claim against Mr Sarian as guarantor dismissed on the preliminary issue.

Orders

  • Claim against Mr Sarian as guarantor dismissed.
  • No order as to rectification or estoppel.