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Talking Law with Ivie: So You Want to Stand As a Guarantor For LeBoo? Read this Before You Sign that Document

Ivie Omoregie



Ivie Omoregeie - Talking LawJust the other morning a friend of mine called me sssscccrreeeaammmiinnggg; she said a certain Nigerian bank had deducted N7m from her account. It was a Saturday morning, so there was no way to contact the bank to ask them for the exact details of the transaction. She said her account manager’s number was not going through and that when she checked online she could not see specific details for the deduction…just a series of transaction codes.

After calming her down, I asked her to be patient and wait till Monday to get clarifications. There was actually nothing that could be done before then, so she had no choice but to relax and sleep. (I can just visualise her in church the following morning…hehe)

When she called the bank on Monday, she was given the biggest reality check of her entire life. Apparently 2 years prior this time, her ex-fiancé had wanted to expand his business and needed a loan from the bank. He didn’t have any assets to secure the loan, and had asked her to stand as his guarantor. She has a flourishing interior design business, and also receives a considerable amount as rental income from property she inherited from her grandfather. Her boo was her world and they were about to be married and start a life together. She was doing well, so accepted to be his guarantor. In all honestly I think she desperately wanted to personify the perfect “wifey” and so couldn’t say no.

He kept on stressing that it was just a hypothetical situation and that the chances of him defaulting were slim. She told herself she knew him inside out and would be able to police his obligations under the loan agreement. The way she saw it “at least he wasn’t being a waste man with no ambition. He had big dreams of growing his business and was not asking her to ‘lend’ him money”.

As you can imagine, when the relationship scattered because his ex-girlfriend had just given birth to his first child, “policing his loan obligations” were not at the forefront of her mind. In all honesty, she had completely and utterly forgotten about that random document she signed over 2 years ago.
The question now was…how does she get her money back?

Let’s start with the Guarantee Agreement
A Guarantee Agreement is defined as a written undertaking made by one party (the “Guarantor”) to a second party (usually the “Creditor”), consenting to be responsible if a third party (usually the “Principal Debtor”) fails to perform a certain duty, i.e. payment of a debt.

Halsbury’s Laws of England defines a Guarantee Agreement to mean an accessory contract by which the Guarantor undertakes to be answerable to the Creditor for the debt, default or miscarriage of a Principal Debtor; the primary liability to the third party must exist or be contemplated before the creation of the Guarantee Agreement.

I must stress that in considering the adequacy of a Guarantee Agreement, what is of importance is the financial position of the Guarantor and not the financial inadequacy of the Principal Debtor.

The Creditor
This is the person to whom obligations of the Principal Debtor and the Guarantor are owed. In the event that the Principal Debtor defaults on his/her obligation to pay the principal loan, then the Creditor may recover the amount outstanding from the Guarantor.

The Principal Debtor
This is the person primarily liable to the Creditor for the obligation guaranteed. The Principal Debtor is not a party to the Guarantor’s contract with the Creditor, even though the Guarantor’s contract stems from the dealings of the Principal Debtor. Thus we often see instances where the Creditor has deemed the Principal Debtor as incapable of settling the debt and thus focuses all efforts on retrieving the outstanding monies owed, plus interest, from the Guarantor (i.e. they no longer bother with the Principal Debtor and “hound” only the Guarantor).

The Liability of the Guarantor
The Guarantor’s liability is a secondary obligation that is only triggered upon default by the Principal Debtor. A Guarantor cannot be held liable for more than he/she has undertaken to guarantee; in addition, the liability of a Guarantor cannot exceed that which is owed by the Principal Debtor.

The Guarantor’s Rights on Demand for Payment
The manner in which the Creditor is able to make a demand against the Guarantee Agreement is usually dependant on the terms of that agreement as well as the terms of the agreement between the Principal Debtor and the Creditor. Generally, the Creditor is only required to issue a demand notice to the Guarantor upon a default by the Principal Debtor, the Creditor may thereafter commence legal action for recovery if the Guarantor does not comply with the terms of the demand notice.

Unless the Guarantee Agreement itself provides otherwise, generally:
• There must be a clear case of default on the part of the Principal Debtor before the Creditor can pursue the Guarantor;
• All remedy periods relating to the event of default should have expired with the default in question not having been remedied;
• The Creditor must not have impliedly or expressly waived the default in question.

However, I must stress that the terms of individual Guarantee Agreements are governed on a case by case basis; we are now seeing instances where as a prerequisite, Creditors are demanding that the Guarantor issues blank cheques, said cheques to be presented by the Creditor at the point of default by the Principal Debtor, without the obligation requiring the Creditor to give the Guarantor prior notice.

The Guarantor’s Rights After the Settlement of Debt
A Guarantor has a right to the recovery of money improperly paid to a Creditor, this would entail money which could have been paid under a mistake of fact as to the Principal Debtor’s obligations.

The Guarantor may also be indemnified by the Principal Debtor for the total amount paid in settlement of the debt, plus interest. However, in reality a Principal Debtor who was unable to repay its Creditor is unlikely to be able to repay the Guarantor.

Determination of a Guarantee
I must stress that unless the agreement to which the Guarantee was given had been terminated in accordance with the terms of that agreement, whilst the Creditor is being owed an obligation by the Principal Debtor, the Guarantors obligation to the Creditor will continue to subsist.

Furthermore, unless the Guarantee Agreement provides to the contrary, the Guarantee will be determined if the Principal Debtors obligation is changed without the Guarantor’s consent.

My friend was able to confirm that the reason why the bank was able to simply deduct the money from her account was because she had issued an undated cheque at the time of signing her Guarantee Agreement. It was simply filled in and presented as final settlement for the debt.

Luckily for my friend, under the terms of her agreement, the bank was supposed to give her several demand notices at the point of default to enable her mitigate the situation with hopes of getting the Principal Debtor to pay the debt being owed to the Creditor.

The bank had failed to do this, thus were forced (after stern warnings from my friend’s lawyer, who happens to be a no-nonsense highly rated Senior Advocate of Nigeria and who also happens to be my friend’s father) to reverse the transaction and follow due process.

The concept of guarantor is something which is now a part and parcel of modern day banking, yet what intrigues me is the fact that many people do not seem to appreciate the full implication of standing as someone’s guarantor. Maybe this stems from the fact that it is to a large extent a worst case scenario.

Ivie Omoregie is the Founding Consultant at Skye Advisory. Skye Advisory is a boutique business advisory firm with locations in London, England, as well as Lagos, Nigeria. Skye Advisory offers bespoke Legal, Financial and General Business advisory services to small and micro businesses. Ivie is a duly qualified lawyer with years of cross border experience in the areas of Corporate Advisory, Energy and Projects, Finance and Litigation.  Ivie is also an active member of the Nigerian Bar Association as well as an avid woman's and children's rights promoter. View more details about her at Follow her on Twitter @Ivie_Omoregie and Instagram @Ivie.Omoregie "


  1. pinkie

    August 5, 2016 at 5:19 pm

    OTURUGBEKE *in my grandma’s voice*

  2. Nkechi

    August 5, 2016 at 5:33 pm

    Bible don talk am in Proverbs. No stand as surety. You can still be good.

  3. Baby gurl

    August 5, 2016 at 5:35 pm

    Amazing article Ivie! So many people need to be aware of this indeed. Your friend knew it was either one outcome or the other. I guess we as humans always know the possibilities deep down but choose to ignore because our minds and hearts are clouded with trust and love. Which is great BUT should be distributed with caution. What we should hope for ourselves is the gift of foresight as well as the spirit of discernment.

  4. Bodunade

    August 5, 2016 at 6:10 pm

    Nice article ivie, everything on point. I have a question though? Why are women always the victim in most BN articles.
    This is unrelated to the the article but Forgive me for going Paul Adeyemo on this.
    Nigerian men must be monsters. I’m beginning to hate people of my gender. It’s getting a bit much lol

    • A

      August 5, 2016 at 9:07 pm

      Facts man, it’s facts. You didn’t hear your boys gisting in secondary school and uni? Or now? Just ask your mum, her friends, your sisters, their friends, your friends etc. it’s unfortunate sha

    • Miss Ghana

      August 6, 2016 at 8:32 am

      because Nigerian women and many african women have been taught to treat men like trophies. men are a simbol of arrival and achievement so they put up with all sheieettt to keep them. Do not blame BN, this is a representation of the real life situation. While the men act the exact opposite because they have been over glorified.

    • Bodunade

      August 6, 2016 at 10:31 am

      Miss Ghana, you are right. Women are all saints especially Nigerian women 🙂

    • Naijatalk

      August 6, 2016 at 12:27 pm

      People will only write about their experiences. You can also decide to share on BN, the stories of men who have fallen victim to the shenanigans of men/women. If you don’t share, then we will not know.

  5. Angel

    August 5, 2016 at 6:35 pm

    Nice article. Very enlightening. Keep up the good work!

  6. Didi

    August 5, 2016 at 7:22 pm

    Well done Ivie. Love your work. I swear you just saved me. I was contemplating doing this for my brother. Still soo confused.

    • Fade

      August 6, 2016 at 11:07 pm

      If your brother is anything like mine, don’t do it. Forget emotions. You can mess your life up. Be warned.

  7. alwayshappy

    August 5, 2016 at 7:44 pm

    Good topic Ivie, for those who have ears let them ear : you have got 2 eyes and 1 ear if person bring you form or request to be guarantor – Ask #good questions, the quality of your questions matters. If you don’t know what questions to ask, just ask me , once you have paid my account #consultancy fees i will give you #thekoko or #borrowyoubrain

    1. What is the term of your guarantor obligations?
    2. How can you revoke your guarantor status with notice/ how much notice is required/ how is it to be delivered
    3. Just like your will( hope you have one) you should be revising and reviewing it every year or every time you go through a life change.
    4. In the event of default by primary, what is your own ranking for kasala or hot lava to pour on you.

    A life change is defined as any event that has immediate of future impact on the following : money, family ( nuclear/extended) and employment. So if they fire you, or you change jobs, or your relocate to a new state/country, you born pickin, you adopt pickin, your parents die, or your parents are going through terminal illness ,you don marry, you don un-marry, your maga don pay? hope you get the gist, enough examples make i go check alert!

  8. Lexy

    August 5, 2016 at 8:44 pm

    Only a fool would stand as surety for a man who is not her husband/father of her children, brother or father.

    • Idomagirl

      August 6, 2016 at 12:17 pm

      Even the husband sef…
      I know of someone who took a loan for her husband at the time, man has “upgraded” now and she’s still paying the loan.

  9. Dr. N

    August 5, 2016 at 9:40 pm

    the love that will make me sign an undated check?
    o di egwu

  10. Tony

    August 5, 2016 at 10:13 pm

    Why are girls all stupid. This is 2016. Wake up ladies.

    • Nunulicious

      August 5, 2016 at 11:17 pm

      All girls are NOT stupid.

  11. a

    August 5, 2016 at 10:33 pm

    I know right. Girls are stupid. Especially the one that raised you and the ones that agree to screw you

  12. Mz Socially Awkward....

    August 5, 2016 at 11:25 pm

    In my own work (because we all need finance… Haha), I’m starting to see a lot of guarantee agreements also written as indemnity agreements – i.e. gaurantor indemnifying the creditor for damage, claims, etc. of the underlying contract (usually a client) as well as standing as financial surety.

    Complicated difference but the guarantor ends up owing a primary AND secondary obligation to a client/creditor. Financial bodies like banks are surely going to be even more crafty in drafting these agreements to be signed by Joe/Jane Public.

    Plus the guarantees is usually exercisable on first demand, without giving the guarantor any opportunity to request proof that things went heels-over-bum wrong with the underlying contract.

    Very prickly, one-sided agreements. Avoid signing as much as possible, unless you’re without options… This was a good article, Ivie.

  13. Starling

    August 6, 2016 at 12:05 am

    Boring….copy n paste things. How come there’s always a friend? It always starts with a (non existent friend)

    • Ewa

      August 6, 2016 at 10:06 am

      Na people like you dey always fall victim. Instead of you to pick out the key points in the article you are here spewing something else…Psheww!!!!

    • LemmeRant

      August 6, 2016 at 1:42 pm

      She obviously has many many friends

  14. Random

    August 6, 2016 at 1:41 am

    I stopped reading at ex-fiancé. Many Naija women out there should stop treating men like a prize. It always backfires when you shortchanged yourself or self worth. We should stop blaming love for a culture that has nurtured low self esteem in our women who make poor choices and decisions. Nigeria sadly has raised a lot of one chance men.

  15. Fabulous B

    August 6, 2016 at 9:04 am

    I’m beginning to be a fan of your articles. This is a very good one. I appreciate. Sharing it right about now! I take this as an advice.

  16. Life changing

    August 6, 2016 at 10:08 am

    I love this babe. She is changing the game n I love it. Well done Ivie. Another well written and enlightening article. You need your own show on tv.

  17. Idomagirl

    August 6, 2016 at 12:16 pm

    Very enlightening.

  18. Dopenaija

    August 6, 2016 at 12:31 pm

    I have come to understand our naija trend that women always like to play victim , a lot of men have done so many things for the sake of love or relationship for their gf or lovers and have been treated very bad , a lot of times, out of the fear of been judge or consider a weak man, when we find our self in narrative Exprience as this situation , we don’t always cry out, for fear of what will people say , the truth is you have bad man, or guy, same way you have bad women or gals

    • Fade

      August 6, 2016 at 11:12 pm

      Nope. The ratio can never be the same. The way our society has structured the “importance” of the man, whether father, brother or husband, it just makes us womenfolk constant victims of this patriarchy.

      Men in Africa have an unbelievable sense of entitlement. And from this, comes the suffering of the women.

      Not to say there armed some hard core women out there also showing high level wickedness to the men, but like I said…ratio pass ratio.

    • Okay

      August 7, 2016 at 7:20 am

      Isn’t funny that you would claim that Nigerian men have an entitlement issue, when ladies are naturally treated with care and affection by men for different reasons. Women like to talk and men don’t talk as much as women, so it is easy for the ratio to be misrepresented because men are not sharing their stories.

  19. nametalkam

    August 6, 2016 at 5:59 pm

    Ivie baby. You have come a long way since your nysc days at deloitte oh. Good job girl.

  20. Omo

    August 7, 2016 at 1:23 am

    My own love can see.My aunt was a arrested because she borrowed some money for her husband through a money lender(abeg who does that)and now brother husband can’t pay back because his business folded up.The money lender decided it was time for my aunt to be arrested.As I type this my aunt is chilling with the police while her husband moves freely.How will she get the 8m???ladies pls be wise

  21. Biniboy

    August 7, 2016 at 4:13 pm

    This line was absolutely unnecessary – “In all honestly I think she desperately wanted to personify the perfect “wifey” and so couldn’t say no”.

  22. V

    August 9, 2016 at 3:39 pm

    I wish she’d lost the money. They are always so ready to be dumb in the name of love. Imagine, of all people to fall for such, the daughter of a lawyer. Shame.

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