My business partner signed a personal guarantee without me, am I liable?
Whether a personal guarantee a partner signed binds you depends on the structure. How liability differs for partnerships versus limited companies.
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Usually not, but it depends on the structure. A personal guarantee binds the people who actually sign it. If your business partner or co-director signed a guarantee in their own name and you did not sign or authorise it, you are generally not personally liable under that guarantee. The important distinction is between a guarantee and ordinary partnership liability: in a general partnership, partners are jointly liable for the debts of the partnership itself under the Partnership Act 1890, but a personal guarantee one partner gives in their own name is their personal promise, not the firm's. For a limited company, a director's personal guarantee is individual: only the directors who signed are on the hook, not the others. So check who signed the document.
Partnership debts vs a personal guarantee
These are two different things. Under the Partnership Act 1890 (section 9), partners in a general partnership are jointly liable for debts and obligations the firm takes on in the ordinary course of business, so a loan to the partnership can expose all the partners. A personal guarantee is separate: it is an individual promise to pay if the borrower defaults, and it binds whoever signs it. One partner can't usually make you personally guarantee a debt simply by signing in their own name.
When you could still be caught
You may be liable if you also signed the guarantee, if you gave the partner express authority to bind you to it, or if the debt is a partnership obligation that you're jointly liable for regardless of the guarantee. Forged or unauthorised signatures are a matter for the courts. If a lender is pursuing you over a guarantee you don't remember signing, get the document and take legal advice promptly.
What to do
Ask the lender for a copy of the signed guarantee and check whose signatures are on it. Establish whether the underlying debt is a company debt, a partnership debt or a personal one, because that changes who is liable. Then take legal advice on your specific position before agreeing to pay anything.
Frequently asked questions
Am I liable for a personal guarantee my business partner signed without me?
Usually not, because a guarantee binds only the people who sign it. The first thing to check is whose signatures are on the document.
What is the difference between partnership liability and a personal guarantee?
Partnership liability comes from being a partner; a guarantee comes from signing one. The section on partnership debts above explains how the two can overlap.
When could I still be liable for a guarantee I didn't sign?
In three cases: you signed it too, you gave your partner authority to sign for you, or the debt itself is a partnership debt. The When you could still be caught section above covers each.
What should I do if a lender pursues me over a guarantee I don't remember signing?
Don't agree to pay anything yet. Get a copy of the signed guarantee, then follow the steps under What to do above and take legal advice.
This is general information, not legal advice. Liability depends on the documents signed and on law including the Partnership Act 1890. Take legal advice on your own situation. Last updated: .