The Guarantors' Liability Act

The Guarantors' Liability Act, C.C.S.M. c. G120 bilingual version (HTML) Table of Contents Section 1 Definitions 2 Application of Act 3 Action against guarantor 4 Limit of guarantor's liability 5 Defence by guarantor 6 Assignment of judgment against bondee 7 Application of Act; guarantor's rights preserved HER MAJESTY, by and with the advice and consent of the Legislative Assembly of Manitoba, enacts as follows: Definitions 1 In this Act, "bond" means an agreement in writing signed by the guarantor under which the guarantor undertakes, upon the default of another person named in the agreement in paying a debt or a debt of a class of debts specified in the agreement (a) to pay a sum of money; or (b) to pay the debt; (« cautionnement ») "bondee" means a person named in a bond upon whose default in paying a debt or a debt of a class of debts specified in the bond the guarantor undertakes to pay a sum of money or to pay the debt; (« caution ») "creditor" means a person to whom a bondee owes a debt; (« créancier ») "guarantor" means a person who undertakes under a bond, upon the default of the bondee in paying a debt or a debt of a class of debts specified in the bond, to pay a sum of money or to pay the debt. (« débiteur ») Application of Act 2 This Act does not apply to, or in respect of, a bond unless endorsed thereon and signed by the guarantor or their authorized agent, or written or printed as part of the bond, there is a statement that this Act applies to the bond. Action against guarantor 3(1) Notwithstanding that the creditor is not a party to the bond, a creditor may, subject to the terms and conditions of the bond, upon obtaining a judgment for the debt against the bondee, recover the debt and the cost of obtaining the judgment, awarded as part of the judgment, from the guarantor and for that purpose may bring and maintain an action against the guarantor in a court of competent jurisdiction. Payment before judgment 3(2) Notwithstanding that a creditor has not obtained a judgment for the debt against the bondee, the guarantor, upon being satisfied of the validity of the debt of the bondee to the creditor, may pay the whole or a portion of the debt to the creditor; and, to the extent that the creditor would have been entitled to recover a judgment for the debt against the bondee and in respect thereof to recover from the guarantor, the creditor shall be conclusively deemed to have been entitled to recover the money under subsection (1). Action on behalf of all creditors 3(3) An action brought by a creditor against the guarantor to recover a debt shall be deemed to be brought on behalf of the creditor and all other creditors (a) who are entitled to recover a debt from the guarantor under the bond and this Act; or (b) who would, on obtaining a judgment against the bondee, be entitled to recover a debt from the guarantor under the bond and this Act. Distribution of money recovered under judgment 3(4) In an action against a guarantor under this section, the judge may give judgment in favour of (a) each creditor who in entitled to recover a debt from the guarantor under the bond and this Act; and (b) each creditor who has not obtained a judgment for the debt against the bondee but who, in the opinion of the judge after hearing evidence and argument with respect thereto, would be entitled, upon bringing an action in respect thereof, to such a judgment on the basis of which the creditor would have been entitled to recover from the guarantor under the bond and this Act; and all money recovered under the judgment shall be distributed pro rata among the creditors in whose favour the judgment is given. Limit of guarantor's liability 4(1) Nothing in this Act makes the guarantor liable for an amount in excess of the amount which the guarantor undertakes to pay under the bond. Specified class of debts 4(2) Where in the bond the guarantor undertakes (a) to pay only a specified class of debts of the bondee; or (b) to pay a sum of money upon default by the bondee in paying a debt of a specified class of debts; nothing in this Act makes the guarantor liable for payment of a debt that is not within that class of debts. Specified debt 4(3) Where in the bond the guarantor undertakes (a) to pay only a specified debt of the bondee; or (b) to pay a sum of money upon default of the bondee in paying a specified debt; nothing in this Act makes the guarantor liable for payment of any debt other than the debt so specified. Defence by guarantor 5(1) In an action against the guarantor under section 3, the guarantor (a) where the judgment against the bondee was obtained by default, may raise any defence which the bondee could have raised in the action resulting in the judgment; (b) where the bondee defended the action resulting in the judgment, may with the consent of the judge raise any defence (i) which the bondee might have raised in that action but failed to raise; or (ii) which in the opinion of the judge was not properly maintained by the bondee in the bondee's defence of the action; and (c) where no judgment for a debt has been obtained against the bondee by a creditor on whose behalf an action is deemed to be brought under subsection 3(3), may raise any defence which the bondee could have raised if an action had been brought against the bondee to recover the debt. Assistance by bondee in defence 5(2) Where the guarantor raises a defence under subsection (1), the bondee shall provide any documents or give any information in the bondee's possession that the guarantor requests for the purpose of maintaining the defence. Assignment of judgment against bondee 6 Where a guarantor pays a debt of a bondee under this Act, either before or after judgment is obtained against the guarantor, the guarantor may require the creditor to assign, and the creditor shall thereupon assign, the creditor's judgment against the bondee to the guarantor; and the guarantor may proceed to enforce the judgment so assigned in the same manner as though the guarantor were the original judgment creditor. Application of Act 7(1) This Act does not apply to, or affect the liability of, a guarantor under a bond entered into prior to April 22, 1965. Rights of guarantor preserved 7(2) This Act does not affect any right that a guarantor may have to recover any amount paid by the guarantor for or on behalf of a bondee from the bondee.