Personal Guaranty, Separate Consideration

A personal guaranty is a type of document in which a guarantor agrees to become secondarily liable for the obligation of a principal debtor if the principal debtor does not perform its obligations. Jamieson-Chippewa Inv. Co., Inc. v. McClintock, 996 S.W.2d 84, 87 (Mo. Ct. App. 1999). The liability of a guarantor is strictly construed in accordance with the terms of the guaranty agreement and cannot be extended beyond the strict letter of the obligation. Dunn Indus. Group, Inc. v. City of Sugar Creek, 112 S.W.3d 421, 434 (Mo. 2003).

Because a guaranty is an independent contract, it, like all contracts, must be supported by consideration. A guaranty executed concurrent with an original contract may be considered part of the original contract and supported by the same consideration. Kansas City Live Block 125 Retail v. Bhakta, 476 S.W.3d 326, 330 (Mo. Ct. App. 2015). If a guaranty is executed after the principal contract, it requires new and independent consideration. Id.

What constitutes sufficient consideration in a guaranty? The simple statement that a guaranty is “for value received” is evidence of sufficient consideration to support the guaranty in most circumstances — though it is not always conclusive. Id.at 331.

Contact.

Related Articles

Premises Liability: Third-Party Criminal Acts

November 22, 2023

As a general rule, if a customer/invitee of a business is harmed by a third-party criminal act, the business is not responsible. The rationale for this rule is that criminal acts are rarely foreseeable. Early v. Dunn, 670 S.W.3d 47, 51 (Mo. App. E.D. 2023). There are a number of exceptions. First, a duty arises…

Read More

Mootness, Exceptions

October 19, 2023

Courts generally shy away from rendering decisions in moot cases. A case is moot when “the question presented for decision seeks a judgment upon some matter which, if the judgment was rendered, would not have any practical effect upon any then existing controversy.” DCM v. Pemiscot County Juvenile Office, 578 S.W.3d 776, 780 (Mo. 2019). There…

Read More

Comity, Multiple Lawsuits, Litigation

October 11, 2023

In complex situations, it is not uncommon for multiple lawsuits to be pending in multiple jurisdictions. When this occurs, one court, in the interests of comity, may allow the other court to handle the entire dispute. At the state level in Missouri, comity is not an ironclad rule, but a rule of “practice, convenience, and…

Read More

Contracts: General versus Specific Provisions

October 2, 2023

Parties are bound to the terms of the contract they sign, unless induced by fraud, duress, or undue influence. Lehman v. Automotive Investments, LLC, 608 S.W.3d 733, 738 (Mo. App. E.D. 2020). In analyzing contracts, courts focus on the plain and ordinary meaning of the language used. Id. Often times, however, a conflict can arise between what…

Read More
Scroll to Top