Ferris v Plaister [No 2]

In Ferris and Another v Plaister and Another [No 2] [1994] NSWCA 97, the New South Wales Court of Appeal considered an appeal concerning the enforceability of a guarantee. The dispute arose from a loan agreement where the appellants, Ferris and another, had guaranteed the repayment of a debt owed by a company to the respondents, Plaister and another. The company defaulted on its loan obligations, leading the respondents to pursue the appellants under the guarantee.

The primary legal issue before the Court of Appeal was whether the guarantee was void for uncertainty. Specifically, the court had to determine if the terms of the guarantee were sufficiently clear and definite to be legally enforceable, particularly in relation to the extent of the liability undertaken by the guarantors. A secondary issue, if the guarantee was found to be valid, concerned the quantum of the respondents' recovery.

The Court of Appeal held that the guarantee was not void for uncertainty. Applying established principles of contract law, the court found that the language used in the guarantee, when read in its commercial context, provided a sufficiently clear indication of the parties' intentions regarding the scope of the guarantors' obligations. The court reasoned that while the guarantee might have been drafted in broad terms, it was not so vague as to prevent a court from ascertaining the parties' agreement. Consequently, the appeal was dismissed, and the guarantee was upheld as a valid and enforceable instrument.