Personal guarantees are used in many different transactions – from buying and selling a business to applying for a line of credit. The purpose of such guarantees is to protect the seller (or issuer) in the event the purchaser fails to pay according to the parties’ agreement. In most of these transactions, the guarantee is attached to (and incorporated by) a lengthy agreement, filled with provisions, representations, and warranties. All too often, clients contact us to help fix problems they have encountered after entering into these guarantees. Some are sellers trying to enforce these agreements, and others are purchasers who need representation for allegedly breaching their agreements. The common thread between these clients is that they all come to Jacobs & King after the agreements have been signed. I guess that’s why attorneys (including the team at Jacobs & King) say they specialize in “dispute resolution” or “litigation defense”.
In order to specialize in “dispute resolution” or “litigation defense”, we rely on our clients having actual disputes, which relate to agreements they previously executed. Contract disputes involving personal guarantees can be incredibly complicated, and often involve significant risks on both sides. One thing is clear – the Plaintiff in a lawsuit over a breach of contract involving a personal guarantee is never guaranteed to succeed. In fact, numerous defenses may exist for Defendants in these cases. If you’re a defendant facing a lawsuit to enforce a personal guarantee, you should contact an attorney to investigate your rights.
Wouldn’t it be nice, however, to avoid making that call? If you’re considering entering into an agreement involving a personal guarantee – whether you are the seller or the purchaser – a more prudent business decision may be to contact Jacobs & King for “dispute prevention” or “litigation avoidance”. Of course there is no way to ensure compliance to an agreement, but making a small investment now could save you a large headache (and larger investment) in the future. If you’re a seller drafting a detailed agreement, contacting an attorney to review the agreement may be the best decision you’ve ever made. If you’re a purchaser looking at an agreement and considering signing it, contacting an attorney to get advice may likewise be the best decision you’ve ever made.
How many television commercials have you seen for the next, great prescription medicine? If you’re like me, you’ve grown tired of the predictable ending – “Do not take if you have high blood pressure or diabetes. This drug may cause headaches, nausea, drowsiness, or other heart disorders.” We all know that the purpose of the disclaimer is to protect the drug manufacturer from the rare chance that the patient suffers a serious complication. The manufacturer is being proactive to prevent disputes. When you’re entering into an agreement that could have serious consequences, shouldn’t you also be proactive to prevent disputes? Our firm will be happy to assist you in drafting your contract and reviewing your contract, and our team of litigators and corporate attorneys can also help if you’re involved in a dispute relating to a contract that you previously executed. All it takes is a call.