REVOCATION OF A PERSONAL GUARANTY

By: Rachel A. Humphrey Georgia courts continue to uphold express contractual provisions setting forth the procedures by which a personal guaranty may be revoked.  Under the rules of contract construction, where the language in an agreement is clear and unambiguous, no construction is required or permitted by the trial court.  See Hill Roofing Co., Inc. v. Lowe=s Home Centers, Inc., 265 Ga. App. 822 (2004).  Where a guaranty provides the requirements for its revocation (satisfaction), full compliance with the express contractual terms is required to effect a valid revocation.  Cosby v. A.M. Smyre Manufacturing Co., 158 Ga. App. 587 (1981).  Thus, it is imperative that a creditor include in its contract for personal guaranty express provisions providing for written notice to the creditor revoking the guaranty.  That way, if the guarantor gives notice in any way inconsistent with the express terms of the contract, such revocation will be unenforceable.  See Browning v. National Bank of Georgia, 143 Ga. App. 278 (1977) (where guaranty contract provided that agreement would remain in force until written notice revoking had been received by bank, fact that guarantor called bank loan officer and advised him he no longer guaranteed loan did not, in absence of written notice, revoke guaranty); Haynie v. First National Bank of Atlanta, 117 Ga. App. 766 (1968) (even where notice is given to bank that guarantor had terminated his connection with corporation and authority to sign on behalf of corporation was terminated, in order to revoke status as guarantor, guarantor was required to provide written notice of revocation in accordance with contractual requirements). Every creditor should review its contracts relating to personal guaranty and make certain that specific, procedural revocation language is included to protect the creditor. Stokes Lazarus & Carmichael LLP has provided legal services for the banking community in the areas of credit and collections litigation, fraudulent transfer litigation, bankruptcy representation, and bank loan workouts since its inception in 1972. We pride ourselves on AReal World Legal Solutions7.@  We welcome the opportunity to discuss how we can help you optimize recoveries.   If you would like further information, please contact Wayne H. Lazarus at whl@slclaw.com or at (404) 352-1465, extension 24 or Rachel A. Humphrey at rah@slclaw.com or at (404) 352-1465, extension 43.