In a recent edition of Fully Secured (June 26, 2013 –
Volume 4, No. 2), we reported on the Ontario Court of
Appeal's decision inin Samson1 and its impact on the
enforceability of standard form guarantees. In Samson, the Court of
Appeal overturned the earlier decision of the Ontario Superior
Court of Justice which held that a continuing guarantee of a
borrower's present and future debt was unenforceable on the
basis that the guarantor had not consented to material changes to
the underlying loan agreement. In summarizing its
conclusions, the Court of Appeal determined that while the
increased loan advances made by the lender to the borrower were
material alterations to the principal loan agreement, they were
also contemplated by the parties, permitted by the clear language
of the guarantee, and inherent in a continuing all accounts
guarantee that contemplates increases in the size of the underlying
The Guarantor applied for leave to appeal the Court of
Appeal's decision, and that application was dismissed by the
Supreme Court of Canada on November 14, 2013. Lenders can take
comfort that the clear language of a standard form guarantee
continues to be enforceable in accordance with its specific terms
in circumstances similar to those present in Samson.
1 Royal Bank of Canada v. Samson Management &
Solutions Ltd., 2013 ONCA 313 [Samson].
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