Morison v Peck Aerofako BV v Peck

In *Morison v Peck Aerofako BV v Peck* [1991] NSWCA 205, the New South Wales Court of Appeal considered a dispute concerning the enforceability of a guarantee. The appellant, Morison, sought to enforce a guarantee against the respondent, Peck, in relation to debts owed by a company, Peck Aerofako BV. Peck argued that the guarantee was invalid due to a lack of consideration.

The central legal issue before the Court of Appeal was whether the guarantee provided by Peck was supported by sufficient consideration to be legally binding. Specifically, the court had to determine if the forbearance by the creditor to pursue legal action against the principal debtor constituted valid consideration for Peck's promise to guarantee the debt.

The Court of Appeal held that the guarantee was enforceable. Applying established principles of contract law, the court found that the creditor's agreement to refrain from taking legal proceedings against Peck Aerofako BV, in exchange for Peck's guarantee, constituted good consideration. This forbearance was a detriment to the creditor and a benefit to the debtor, and it was given in exchange for Peck's promise. Therefore, the requirements for valid consideration were met. The court allowed the appeal and ordered that the guarantee be enforced.