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Contract - Guarantee - Continuing Guarantee. Intercap Equity Inc. v. Bellman
In Intercap Equity Inc. v. Bellman (Ont CA, 2021) the Court of Appeal considered continuing guarantees:[38] The appellants claim the motion judge failed to consider that continuing guarantees have the following hallmarks:a. Future advances are covered by continuing guarantees even after existing obligations have been satisfied and the consent of guarantors to enable a lender to provide future advances is not generally required: Kevin McGuinness, The Law of Guarantee, 3rd ed. (Markham, Ontario: LexisNexis Canada Inc., 2013), at para. 15.44; see also Royal Bank of Canada v. Samson Management & Solutions Ltd., 2013 ONCA 313, 115 O.R. (3d) 380, at paras. 24-32, leave to appeal refused, [2013] S.C.C.A. No. 301; Royal Bank v. Poisson (1977), 1977 CanLII 1129 (ON SC), 26 O.R. (2d) 717 (H.C.), at pp. 718-719; and Granata Family Trust (Trustee of) v. Royal Bank, [2000] O.J. No. 4239 (Ont. S.C.), at paras. 12-16;
b. The time for a continuing guarantee is usually indefinite, in which case the guarantor has a right to provide notice of cancellation for future liability which freezes the liability at the amount outstanding at the end of the notice period: McGuinness, at paras. 15.57, 15.62; and
c. Continuing guarantees do not contain a reference to a specific loan agreement and cover future debts without qualification: see Samson, at para. 24; Poisson, at pp. 718-719; Granata, at paras. 12-16. ....
[41] There are no hard and fast rules to determine whether a guarantee is a continuing guarantee: McGuinness, at para. 15.55.
[42] Moreover, to support their submission that a hallmark of a continuing guarantee is that it does not reference a specific loan agreement, the appellants rely on authorities that feature “continuing all accounts” guarantees. An “all accounts” guarantee extends to all debts owing or that may become owing to the creditor, whereas a continuing guarantee covers a series of transactions: McGuinness, at paras. 7.5, 15.43-15.44. While most continuing guarantees are also all accounts guarantees, this is not necessarily always the case: McGuinness, at para. 15.40.
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[44] In any event, while hallmarks may be of some assistance, what is most important is to look at the language of the agreements, giving the words their ordinary and grammatical meaning, consistent with the surrounding circumstances known to the parties at the time of contract formation: Sattva, at para. 47.
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