Setting Aside Guarantees: Another Approach

This article examines the recent decision of the House of Lords in Royal Bank of Scotland plc v Etridge (No 2)-a case concerning the law and procedures applicable to situations where a wife charges her interest in property to guarantee her husband's borrowing. It considers the extent to which their Lordships are successful in their attempt to balance the interests of both lenders and guarantors in such situations, having particular regard to the paramount need for the law in this area to be clear, simple and practically operable. The author contends that, as measured against their own objectives, the House of Lords have fallen short in a number of significant respects. When analysing the problematic areas in the Etridge decision, the author articulates his own preferred approach as to those circumstances in which guarantees should be permitted to be set aside, and in so doing, draws in part upon the jurisprudence of other Commonwealth jurisdictions and their treatment of the law of guarantees.