Supreme Court of Cyprus: Personal guarantees remain binding, even in cases of alleged psychological pressure (Ακολουθεί κείμενο στα Ελληνικά)
In a recent decision by the Supreme Court of Cyprus (Civil Appeal No. 37/2015), an appeal by a woman who had guaranteed loans for a company in which she was a member was dismissed. She claimed she had signed the guarantees under pressure from her husband and the bank. The bank, A. B. Cyprus Ltd, had already secured a judgment against the company and other guarantors and pursued the appellant (i.e. the person who filed the appeal) for the remaining debt, also seeking the forced sale of her mortgaged properties.
The appellant argued that her signatures on the personal guarantees and mortgages were the result of emotional pressure, coercion, and a lack of independent legal advice. She also filed a counterclaim, seeking to annul the guarantees on those grounds.
The District Court held that (a) the appellant was fully aware of what she was signing, (b) she was actively involved in the company's management and in securing the banking facilities, (c) the guarantees and mortgage she provided were valid and continuous, covering both existing and future obligations of the company, and (d) the claims of psychological pressure and coercion were fabricated and unconvincing.
On 22 January 2025, the Supreme Court upheld the District Court's decision, noting that:
- There was no evidence that the appellant was unaware of what she was signing.
- There was no connection between a later allegation of domestic violence and the signing of the guarantees.
- The documents were signed after explanations were given by bank officers, and after the documents had been reviewed.
- The appellant's general denials and vague allegations had not been properly pleaded nor supported by acceptable evidence.
Key points of the ruling:
- The guarantees were found to be binding, even though they had been signed years before the specific banking facilities were granted.
- The claim that her right to a fair trial within a reasonable time was violated was rejected, as part of the delay was due to the appellant herself.
- The attempt to annul the guarantees based on later claims of pressure or misrepresentation was deemed unfounded.
What citizens and businesspeople should know:
This decision highlights the importance of fully understanding legal obligations when signing personal guarantees or mortgages. Courts will not cancel valid guarantees unless there are exceptional circumstances proven with convincing evidence. Active involvement in corporate decisions and the signing of documents implies acceptance of responsibility.
Conclusion
This case serves as a reminder that personal guarantees are serious legal commitments. Signatories should seek independent legal advice, carefully read all documents, and understand the scope of their obligations. Invoking psychological pressure after the fact is not enough to invalidate guarantees without clear and persuasive proof.
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.