Girlock (Mfg) Pty Ltd v Caprion

In *Girlock (Mfg) Pty Ltd v Caprion*, the New South Wales Court of Appeal considered a dispute between Girlock (Mfg) Pty Ltd and Caprion concerning the enforceability of a guarantee.

The central legal issue before the Court of Appeal was whether Caprion, as a guarantor, was discharged from its obligations under a guarantee due to a material alteration of the principal contract between Girlock and a third party, without Caprion's consent. Specifically, the court had to determine if the variations to the original agreement constituted a fundamental change that prejudiced the guarantor.

The Court of Appeal held that for a guarantor to be discharged due to variations in the principal contract, the variations must be so substantial as to amount to a departure from the original contract, thereby creating a new and different contract. The court applied the principle that if the creditor and the principal debtor make a material alteration to the contract without the guarantor's consent, and this alteration is prejudicial to the guarantor, then the guarantor is discharged. In this instance, the court found that the alterations made to the principal contract were not of such a fundamental nature as to discharge Caprion from its guarantee.

The appeal was dismissed.