H signed guarantee for company. Was told by bank manager it would only be for X amount until they got guarantee from directors. Got it. Company goes bankrupt. Bank goes after H
Can the oral evidence be used?
There must be clear intent that the parties are creating a separate agreement (collateral agreement). A collateral agreement cannot be established where it is inconsistent with or contradicts the written agreement
A collateral agreement – a promise to do something to enter into a contract – another form of consumer protection. The guarantee was to be immediately effective. The oral evidence is in complete contradiction of the written document. There must be a clear intention to create a binding contract
Appeal dismissed – the collateral agreement (oral) cannot stand as it clearly contradicts the terms in the written contract