Gastronome (UK) Ltd v Anglo Dutch Meats (UK) Ltd

[2006] All ER (D) 377 (Jul), LTL 26/7/2006

26th July 2006

Court of Appeal


The appellant (A), a wholesale food supplier, was part of a group of companies. It was also the 76% shareholder in another company, (X). The respondent (R) was a subsidiary of a French company, as was another company (C), both of whom were also in the food supply business. In 2001 X approached R to arrange for R to supply products for sale in the UK. R first required a guarantee agreement to ensure its invoices would be paid. The guarantee agreement, addressed to R, and on A’s headed paper, was sent to C to guarantee any amounts owed by X. The guarantee was renewed two years later. R fulfilled all X’s orders, but the following year X went into liquidation, owing R almost £185,000. R sought to enforce the guarantee against A for the amount owed. A appealed on the basis that the beneficiary of the guarantee agreement was C, not R, an argument rejected by the judge at first instance.

The guarantee was meant to benefit R. The address on the agreement was a mistake, and it was clear from the dealings of the parties that A was to be liable for X’s debt to R.

A court on the construction of a guarantee. A subsidiary company not named in the guarantee was nevertheless held entitled to enforce it.

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