Formalities

• Pages: 26-33

Certain contracts, though not void or voidable, cannot be enforced in a court of

law unless the claimant who seeks to enforce the particular contract can produce a

suffi cient written note or memorandum of the agreement signed by the defendant or

his agent.

The requirement of writing was fi rst introduced by section 4 of the Statute of

Frauds 1677, and Commonwealth Caribbean jurisdictions either apply the original

section 4 or have reproduced its provisions in their local enactments, such as the

Property and Conveyancing statutes.

1 The contracts affected by section 4 and its

equivalents are:

(i) contracts of guarantee;

(ii) contracts for the sale, lease or other disposition of an interest in land.

CONTRACTS OF GUARANTEE (SURETYSHIP)

A contract of guarantee is made where one party (the guarantor, or surety) promises

the other (the creditor) that he will answer for the contractual or tortious liability of

a third person (the debtor): for example, where G guarantees D’s bank overdraft by

promising the bank that if D does not repay the loan, G will do so;

2 or where G guar-

antees the fi delity of a prospective employee (D), such as a produce buyer, by prom-

ising the employer that if D defaults or commits a fraud, G will make good the loss

to the employer.

3

Nature of guarantee

In a contract of guarantee or suretyship there are three parties: a principal creditor

(C) a principal debtor (D), and a guarantor (G). Thus, where G guarantees D’s debt

to C, there are three collateral contracts:

(i) the contract between C and D out of which the guaranteed debt arose;

(ii) the contract between G and C whereby G makes himself secondarily liable to pay

D’s debt in the event of D’s default; and

(iii) the contract between D and G whereby D promises that if G satisfi es D’s debt to

C, D will reimburse G.

CHAPTER 3

FORMALITIES

1 See, for example, s, 47, Property Act, Cap 236 (Barbados); s 43(1), Property Act, Cap 190 (Belize);

and s 4(1) Conveyancing and Law of Property Act, Ch 56:01 (Trinidad and Tobago).

2 National Bank of Nigeria Ltd v Awolesi [1964] 1 WLR 1311; Ikomi v Bank of West Africa Ltd (1965) ALR

Comm 25.

3 United Africa Co Ltd v Jazzar (1940) 6 WACA 208.