- A guarantee is a separate promise, made by the guarantor to the creditor, to answer for another person's or company's debt if that borrower does not pay.
- Whether a creditor must first pursue the borrower before coming after the guarantor comes down to the specific wording of the guarantee: - Some guarantees are written so the creditor can…
- Ontario's Statute of Frauds requires certain contracts, including guarantees, to be evidenced in writing to be enforceable.
You signed a personal guarantee years ago — for a business loan, a commercial lease, or a friend's financing — and mostly forgot about it. Now the borrower has defaulted, and instead of hearing about a lawsuit against them, you are the one being served. It is a jarring position, and a common question follows immediately: can a creditor really go after the guarantor before, or even instead of, suing the person who actually borrowed the money?
Suing a guarantor in Ontario without first pursuing the borrower is often legally possible, but whether it is depends heavily on exactly what the guarantee document says. This guide explains how guarantee liability generally works, what a creditor typically has to prove, and what to do if you have been named in a claim as a guarantor.
What a Personal Guarantee Actually Promises
A guarantee is a separate promise, made by the guarantor to the creditor, to answer for another person's or company's debt if that borrower does not pay. It is a distinct contract from the underlying loan or lease agreement — which is exactly why a guarantor can end up facing legal action even though they never received the money or the goods themselves.
Can the Creditor Skip the Borrower?
Whether a creditor must first pursue the borrower before coming after the guarantor comes down to the specific wording of the guarantee:
- Some guarantees are written so the creditor can pursue the guarantor as soon as the borrower defaults, without first suing, obtaining judgment against, or exhausting collection efforts against the borrower.
- Others are written more narrowly, so the creditor's right against the guarantor only arises after certain steps against the borrower have been taken or have failed.
Because the outcome turns on the document's exact language, reviewing the actual guarantee you signed — not assumptions about what "guarantee" generally means — is the necessary first step whenever this question comes up.
The Written-Requirement Rule
Ontario's Statute of Frauds requires certain contracts, including guarantees, to be evidenced in writing to be enforceable. In practical terms, this means a creditor generally cannot enforce an oral promise to guarantee someone else's debt — there needs to be a signed document, or at minimum written evidence of the guarantee's essential terms. If you are disputing that you ever agreed to guarantee a debt, whether an enforceable written guarantee actually exists is one of the first things worth examining.
Guarantor vs. Co-Signer: Why the Label Matters
| Role | Typical position | Practical effect |
|---|---|---|
| Guarantor | Promises to pay if the primary borrower does not | Liability can depend on the guarantee's specific wording about when it is triggered |
| Co-signer / co-borrower | Takes on the debt as a primary obligation alongside the borrower | Generally treated as equally responsible for the debt from the start, not as a backstop |
The label used in a document is not always decisive on its own — courts look at the substance of what was actually promised — but it is a useful starting point for understanding which category you likely fall into.
What a Creditor Generally Has to Prove Against a Guarantor
- A valid, written guarantee exists and was properly signed.
- The underlying debt or obligation is real and the borrower is in default.
- The guarantee's own conditions for triggering the guarantor's liability (if any) have been met.
- The amount claimed against the guarantor is accurate and properly calculated.
If You've Been Named as a Guarantor in a Lawsuit
- [ ] Locate the original signed guarantee document and read its exact wording
- [ ] Confirm the response deadline on the claim and calendar it immediately
- [ ] Check whether the creditor has actually taken the steps the guarantee requires before pursuing you, if it sets any conditions
- [ ] Gather records of any payments already made toward the debt, by you or the borrower
- [ ] Get advice before assuming the amount claimed, or your exposure, is fixed
Frequently asked questions
Do I have to pay the full debt, or just a portion, as a guarantor?
That depends on what the guarantee document says and how many guarantors signed it. Some guarantees make each guarantor liable for the entire debt; others split liability. Read the specific wording rather than assuming an even split.
What if I signed the guarantee under pressure, or didn't fully understand it?
That can potentially be a basis to challenge enforceability, but it is a fact-specific and often difficult argument to win — courts generally hold parties to written agreements they signed. If this describes your situation, it is worth raising with a lawyer rather than relying on it as a given defence.
Can the creditor come after my personal assets, even though the debt was for a business?
Often, yes — that is typically the entire point of a personal guarantee: it extends the creditor's reach beyond the business to the individual who guaranteed it. This is why guarantees are taken so seriously before signing, and why disputing one after the fact is genuinely difficult.
Does it matter if the borrower has since gone bankrupt?
It can affect the practical dynamics of the case, and sometimes the legal analysis too, but a borrower's bankruptcy does not automatically eliminate a guarantor's separate liability under the guarantee. This is a situation where getting advice quickly matters.
This is a litigation question
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