Is a bank's personal guarantee valid when the bank stops honouring the company's cheques?

British Columbia, Canada


The following excerpt is from Spetifore Estate v. S. Spetifore and Sons Ltd., 1998 CanLII 2791 (BC SC):

In Bank of Montreal v. Wilder (1986), 1986 CanLII 3 (SCC), 8 B.C.L.R. (2d) 282 (S.C.C.), the respondent was a shareholder in a company that had borrowed money from the appellant. Part of the security for that loan was a personal guarantee from the respondent. The company ran into financial difficulties, but the bank agreed to continue funding the company until the road-building project it was engaged in was completed. Shortly after they came to this agreement the bank stopped honouring the company's cheques and commenced an action against the guarantor.

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