Director must repay £150,000 investment after giving guarantee

A company director must repay a £150,000 investment after guaranteeing that he would double the figure within eight weeks.

The case involved the director of a company based in the United Arab Emirates. He was looking for an urgent investment to finance a deal.

He met a potential investor and told him that the typical investment turnaround was approximately eight weeks. He later emailed the investor saying the investment would be doubled within eight weeks.

He then sent a follow-up email saying that in the unlikely event the investment failed, he would personally guarantee to return the money.

No repayment was made and the investor took legal action. The case went to the High Court where the director argued that there was no time limit to the guarantee. He said that the written communications had to be understood in the context of the oral communications. He alleged that he had made it clear in telephone conversations that although the investment was guaranteed, there was no guarantee as to when it would be repaid.

The court found in favour of the investor. It held that the director’s account was implausible as it suggested the agreement was not as it appeared to have been from the written documents.

It was wholly implausible that anyone would have agreed to invest £150,000 and transfer the money on the same day on the basis of an entirely open-ended guarantee. It was quite clear that the director had intended the investor to rely on his emails.

In those emails he had said that he would return the investment in eight weeks.

Please contact Sarah Liddiard if you would like more information about the issues raised in this article or any aspect of contract law.