A guarantee is a type of contract. Accordingly, it must be in writing or there must be a note of the agreement signed by the guarantor (or at its direction).

There is case law to suggest that a guarantee, or indeed any contract, is not formed unless all parties have signed the document. In addition, some documents include language which specifically states that the terms shall not become effective until all parties have properly signed their counterpart copy. Wording of this type could cause problems for beneficiaries of guarantees.

If a guarantee is specified to be "joint and several" then although the guarantors are jointly liable to the beneficiary, they have several liability between themselves. This means that the guarantors are likely to have the right of contribution from their co-guarantors. Therefore it could be relevant to the proposed guarantors how many others are going to be bound by the arrangement.

In the case of Harvey, a guarantee had been sought from four individuals. One of the guarantors alleged that his signature on the guarantee was forged and the question arose as to whether the guarantee would be binding on the remaining three guarantors.

There was nothing in the guarantee which explicitly stated that the remaining three proposed guarantors should be bound in this situation. A similar issue had been examined in the case of Bank of Scotland v Henry Butcher & Co & Ors [2003] EWCA Civil 67. In that case, the guarantee had helpfully dealt with this possibility by including a statement that "Each of us if more than one shall be bound by this Guarantee even if any person who was intended to execute or to be bound by it may not execute it or may not so be bound."

There were two particular clauses in the Harvey case which were looked at in some detail.

The first stated that "The liability under this Deed of the Guarantor and each of them if more than one shall not be avoided or invalidated by reason of and guarantee or any charge by and co-security being invalid or unenforceable". It was common ground that the last word "and" was intended to be "any". This is a common statement in guarantee documents. In Harvey it was decided that the statement did not offer protection where the guarantee of one of the proposed guarantors had never come into existence (and therefore it could not be either invalid or unenforceable).

It was considered that more helpful clauses stated "Neither the obligations of the guarantor herein contained nor the rights, powers and remedies conferred in respect of the guarantor upon the Bank by any agreement this Deed or by lack shall be discharged impaired or otherwise affected by"..."Any failure to take or fully take any security contemplated by or otherwise agreed to be taken in respect of the Principal Debtor's obligations to the Bank." The reference to the singular "guarantor" meant that the clause applied to the guarantors jointly but also individually. It was considered that the reference to "security" should be construed to mean any security contemplated by "for example the principal debtor's obligations..to the Bank including the security given by the guarantee itself" [Judge Kay QC, para 42].