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.

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