Broomhead v Nibec Pty Ltd

In *Broomhead v Nibec Pty Ltd*, the Supreme Court of Queensland considered a dispute concerning the enforceability of a guarantee. The plaintiff, Mr Broomhead, sought to enforce a personal guarantee provided by Nibec Pty Ltd in favour of Mr Broomhead, relating to a loan made by Mr Broomhead to a company called B.J. & S. Pty Ltd. Nibec Pty Ltd argued that the guarantee was invalid and unenforceable.

The central legal issue before the Court was whether Nibec Pty Ltd was bound by the guarantee it had provided. This involved determining whether the guarantee was a valid and binding contract, and whether Nibec Pty Ltd had the authority to enter into such an agreement. Specifically, the Court had to consider the implications of the guarantee being executed by a single director of Nibec Pty Ltd, and whether this execution complied with the requirements for a valid deed or contract under Queensland law.

Judge Coates found that the guarantee was valid and enforceable. The Court applied the principles of contract law, noting that a guarantee is a form of indemnity. It was held that the execution of the guarantee by a single director, in circumstances where the company's constitution did not require a second signature or the common seal, was sufficient to bind the company. The Court reasoned that the director had the apparent authority to execute the guarantee on behalf of Nibec Pty Ltd, and that the company was estopped from denying the validity of the guarantee.

The Court ordered that Nibec Pty Ltd was liable to Mr Broomhead under the guarantee.