Check customer changes before invoking an old guarantee
Disclose changes in the customer account and contracting entities when assessing a creditor-held guarantee.
Corporate Recovery Partners
01 / 06
The account may have changed since signing
An old personal guarantee is found while you chase the customer's overdue balance. Before sending a demand to the signatory, review what happened to the trading relationship after it was signed. A new company, revised terms or another arrangement may raise questions requiring legal advice. Do not assume the original document automatically answers every later development.
Imagine a supplier whose customer changed from one operating company to another while keeping the same business name and site manager. The account code stayed unchanged. Record when orders, invoices and payments began using the new company details. Give the lawyer the actual documents rather than describing the change as merely administrative without checking its effect.
business.gov.au recommends documenting changes to contracts in writing. Collect revised credit applications, accepted terms and correspondence about changes to the account. Preserve any earlier versions. Ask the lawyer to assess whether and how those records affect the guarantee. A commercial decision to keep supplying does not itself establish that the personal obligation continued unchanged.
Prepare a schedule that shows which invoices relate to which customer entity and agreement. Account for payments and credits accurately. Do not move amounts between companies just to make the ledger align with the preferred recovery target. If the records are inconsistent, mark the issue and ask the accountant to help explain the history.
Tell the adviser about promises, settlements or correspondence that may be relevant, even if they appear inconvenient. In the supplier's example, a former manager may have discussed a guarantee release that was never reflected in the account notes. Provide what is known and identify gaps. Let the legal assessment address the significance of the evidence.
Ask whether a personal claim is available, what it covers and what steps are appropriate before communicating a demand. Keep company and personal claims accurately described. The objective is a supported decision based on the full relationship, rather than a confident demand built on an old document that has been separated from everything that followed.
