8 September 2020

Lending Focus - September 2020 – 3 of 7 Insights

Personal guarantees, virtual execution and lockdown challenges


During lockdown, when face-to-face signings have not been feasible, dealmakers have had to rely on virtual executions. In this High Court decision, a personal guarantor was unable to avoid his obligations by claiming that signed and scanned pages of the guarantee, emailed to the beneficiary, were not binding.


Swisspro Asset Management Limited (Swisspro) was in the business of trading foreign currencies. 

On 14 November 2016, Umrish Limited (U) entered into a funding agreement with Swisspro as borrower. On 23 November, Swisspro entered into three further funding agreements with other entities represented by the same individual, Mr Ventakesh (V). The loans amounted to £1.5 million in aggregate. 

Bobby Gill (G) was chairman of the Swisspro board, and its sole shareholder. G agreed somewhat reluctantly to provide guarantees in respect of all four loans.

On 27 November 2016, G signed the four personal guarantees relating to those loans. His signature was witnessed by his wife. G sent copies of the scanned signature pages of the guarantees to V's representative.

Swisspro fell behind on payments in 2017. In July 2018, V was still pursuing repayments of the funding agreements on behalf of his clients. U and the three other funding entities commenced proceedings in relation to G's guarantees.

G's defence

G claimed that:

  • V told him the guarantees would not be used "as a sword", only as a "sleeping pill". In other words, V had assured him that they would not be enforced. G relied on these representations when he decided to give the guarantees. V's clients were therefore estopped from calling in the guarantees.
  • The guarantees had not been delivered. The parties had expected that the deeds would become binding only when signed, face-to-face, at the planned completion meeting. Greater formality was required and expected by both parties – a complete, hard copy document, executed by G and physically handed over to V.


The claimants (represented by V) were successful; G's defence failed.

Promissory estoppel

The Judge found that V had represented that the guarantees "would not be called on for minor infractions" and conceded that this could have influenced G to enter into the guarantees. However, he also found that the claimants, in any event, had acted in accordance with V's assurances. Non-payment was clearly a significant breach under the terms of all the loans.

By way of obiter, the Judge found that a pre-existing legal relationship was required to establish the elements of promissory estoppel.


The Judge found that the guarantees were enforceable. He did not accept that there was no delivery, merely because no original, complete document had been signed and handed over by G: "In my judgment, this submission is not realistic in the current age of instant communication".

He went on to say that if one party sends the other a scanned copy of his signature on a document, then, subject to any conflicting context, that party has indicated his intention to be bound by the terms of that document. On an objective assessment, G had delivered the guarantees unconditionally.

While it is possible to deliver a deed in escrow, this was not the case in these circumstances. The only evidence to support the escrow theory was an email from V's colleague suggesting that the parties meet following the virtual signing and scanning of the guarantees, so that G could "sign the original copy as well". In the Judge's view, this was not sufficient "to impose escrow conditions on the guarantees".

(1) Umrish Ltd (2) Spacetel Ltd (3) Voicetec Sys Ltd (4) CFS-Zipp Limited v Bobby Gill [2020] EWHC 1513 (Ch)

Find out more

If you'd like to discuss any of the issues raised in this case in greater detail, please reach out to a member of our Banking and Finance team.

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