Bank of Scotland v William Forbes

Appeal from the Sheriff Principal considering a creditor’s duty of disclosure to a guarantor. Whilst there is no obligation on the creditor to make a disclosure to the guarantor, where it does make representations (either spontaneously or in response to questions), those representations should be full and fair and should not mislead the guarantor by withholding part of the truth. In this case the bank's response to a guarantor’s inquiry as to problems with the debtor's overdraft did not reveal ongoing negotiations between the debtor and the bank nor the fact that an unsecured overdraft had been agreed on the same day as the guarantor made the inquiry.

An extra division of the Inner House recalled the Sheriff Principal’s interlocutor and allowed a proof to decide whether the bank’s response had been full and fair.

Scottish Courts, 18 March 2011