The case of Toma v Taylor Square TT Pty Ltd [2024] NSWCA 304, was a case heard by the New South Wales Court of Appeal.
This case was about an agreement for the purchase of two hotels in Darlinghurst, Sydney. The director of the plaintiff acted as the guarantor for the purchasing entity. The transaction failed to settle, leading to legal proceedings. The court ruled that the guarantor, was obligated to fulfill the settlement terms and ordered him in his capacity as the guarantor to complete the purchase and cover the vendor’s legal costs.
The court’s decision shows just how guarantee clauses in contracts can be enforced, particularly highlighting that a guarantor can be compelled to perform the obligations of the purchaser if the purchaser defaults.
The case shows the importance for guarantors to understand the extent of their liabilities in commercial transactions.
This case illustrates the courts approach to upholding contractual guarantees and the responsibilities of guarantors in property transactions.
