When doing business in Alberta or transacting with an Alberta
party, it is extremely important to be aware of the requirements
contained in the Guarantees Acknowledgment Act (the
"GAA"). The GAA has its roots in the Great
Depression era, is unique legislation among the Canadian provinces
and territories, and represents one of the earliest Canadian
consumer protection enactments. In spite of its octogenarian
status, a lack of familiarity with the GAA can be disastrous due to
the fact that personal guarantees are not legally enforceable in
Alberta unless its legislative formalities are met. As recent
amendments have changed the specific requirements under the GAA,
we wish to clarify a few things in this post.
A personal guarantee is given when a person, other than a
corporation, enters into an obligation under deed or written
agreement to answer for another party's default or omission.
Among other things, these include a personal guarantee of a loan
and some forms of personal indemnification against project cost
overruns or under a commercial lease. Generally, a form of personal
guarantee may be present any time recourse exists against a third
party individual. Subject to certain exceptions set out in the GAA,
these guarantees are not legally enforceable in Alberta unless they
have been properly acknowledged by the guarantor.
Due to amendments contained in the new Alberta Notaries and Commissioners Act, which
came into force on April 30, 2015, a personal guarantee subject to
the GAA is not legally enforceable in Alberta unless the guarantor
acknowledges their executed guarantee in front of a lawyer, and the
lawyer then examines the guarantor and must satisfy themselves that
the guarantor is aware of and understands their obligation. Once
satisfied, the lawyer may issue a certificate signed by themselves
and the guarantor, making the guarantee enforceable. Prior to these
amendments coming into force, this technical process could be
performed by any lay notary public. Now, a guarantee acknowledgment
made within Alberta must be administered by an active member of The
Law Society of Alberta, and acknowledgments made outside Alberta
must be completed by any lawyer entitled to practise law in that
As an aside, we would like to note that an earlier version of
the GAA amendments included a requirement that the lawyer
certifying the guarantee acknowledgment be independent from any
party benefiting from that guarantee. It is important to be clear
that while a certificate of independent legal advice is often a
distinct contractual obligation, the statutory requirement for
independent legal counsel to administer all GAA guarantees was
repealed prior to the amendments' coming into force.
Since the GAA is unique legislation among Canadian provinces,
even established businesses may not be familiar with its technical
requirements if their exposure to the Alberta market is recent. If
you are obtaining a form of personal guarantee as a condition of a
transaction, and the guarantee is executed, delivered, or may need
to be enforced in Alberta, many potential issues are avoided by
ensuring that the new GAA requirements have been complied with.
Failure to do so could significantly restrict the value of the
personal guarantee and your ability to enforce its terms in
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Russell v. Township of Georgian Bay provides a useful reminder of the fact that while municipal officials sometimes appear to hold all of the cards in disputes with home owners, that is not always the case.
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