A 2-page document signed 3 years ago now anchors a dispute that may cost a former business owner her home, her savings, and her retirement security. The document is a personal guarantee, executed when a small hospitality business in southwestern Ontario obtained a $175,000 commercial line of credit from a regional lender. At the time, the business had been operating for 2 years, had 8 employees, and was generating modest but growing revenue. The lender required the guarantee as a condition of extending credit, and the sole shareholder and director of the incorporated business signed it after a brief meeting at the branch, without independent legal advice.

The guarantee was drafted on the lender's standard form and contained broad language. It stated that the guarantor unconditionally and irrevocably guaranteed payment of all present and future indebtedness of the borrower to the lender, waived notice of any amendments or extensions to the underlying credit facility, consented to the lender dealing with any security as it saw fit, and agreed that the guarantee would remain in full force notwithstanding any change in the borrower's circumstances. The guarantor acknowledged that she had read and understood the document and had been advised to seek independent legal advice before signing.

For 2 years, the business made regular payments on the line of credit and maintained the facility in good standing. Then the hospitality sector contracted sharply during a regional economic downturn, and the business lost 2 of its largest corporate clients within 4 months. Revenue fell by 60 percent, and the business began missing payments. The lender permitted several months of irregular payments before demanding full repayment. When the business could not comply, the lender called the loan and demanded $148,000, representing the outstanding principal plus accrued interest and costs.

The corporation had no remaining assets of value. The business premises had been leased, the equipment was subject to a prior security interest held by a different creditor, and the operating account held less than $2,000. The lender's only practical recourse was the personal guarantee. Formal demand was made upon the guarantor for the full amount owing, and when no payment was forthcoming, the lender commenced an action in the Superior Court of Justice to enforce the guarantee.

The guarantor, now facing the loss of assets she accumulated over 25 years of work, disputes whether the guarantee is enforceable on its terms. She contends that the lender made oral representations about the scope of her liability that differ from the written document, that she was not given adequate opportunity to review the guarantee or seek advice, and that the lender's conduct after default—including alleged delays in pursuing the corporate borrower's assets and modifications to the credit terms—releases her from the obligation. The lender maintains that the guarantee is clear, that the guarantor's obligations are unconditional, and that full payment is owed.