The Court of Appeal held that on the facts of this case it was always contemplated that the guarantors would obtain legal advice before they signed the guarantee. This would be a pointless provision if the parties intended to be bound by the terms of an earlier agreement. This was for the obvious reason that, if the intended guarantors’ solicitor advised them against signing, they had to be in the position of being able to take that advice.
The Court of Appeal concluded that the guarantors were not to be bound unless they signed a guarantee document, which they did not. Accordingly no oral agreement to vary the terms of a guarantee was concluded. On the basis of this conclusion, the Court of Appeal did not need to consider the other arguments as to whether s4 of the Statute of Frauds Act 1677 had been complied with.
In this case, the Court of Appeal took a pragmatic approach as to whether an oral agreement had been reached by considering the relevant circumstances and in particular the lack of legal advice.
Investec Bank (UK) Ltd v Arnold Zulman and David Zulman [2010] EWCA Civ 536