Amendment And Restatement Agreement Deed
In Manasseh, two of the three members of the Court held that the “modification and recovery” would replace (and thus terminate) the old facility agreement to which the guarantee relates. As the guarantor of the replacement body did not give its consent, its guarantee did not extend to it. The bank`s case was not aided by the fact that it had given the surety a form of consent that had been refused and that it therefore had to argue that the consent it needed as a precondition for the amendment was not necessary. The terms of a commercial financing facility can be subject to a large number of changes over its duration. They are sometimes contained in a brief change document that covers only the various changes. There may be a number of cases, and for more complex and longer transactions, it is customary for the original agreement to be “modified and revised” with its amendments – in other words, consolidated and contained in a single document. It`s as much for the lightness of reading as anything else. The Bank submitted that a guarantee for the purposes of the facility, as originally documented, had been extended to the “revised and revised” facility agreement that came into force following a default when the global financial crisis hit. Much on the interpretation of the documents to the ease and the guarantee itself, although the case is both interesting for financiers, lawyers and guarantors, since it was a standard guarantee used by one of the big four banks and the situation is common in practice.
Overall, and for me, the outcome depended on the regularity of the provisions documented in the “amendment and recovery”: in its decision, the Court reaffirmed the recognized principle that an agreement to “modify” an existing agreement can either modify the existing agreement without compromising its existence or be able to terminate and replace the existing agreement. This question is determined by the objective intentions of the parties. The other member of the Court found that there had indeed been an amendment that did not null and for the previous agreement and therefore did not require the agreement of the surety on his face. However, his tribute was paid in favour of the guarantor, on the grounds that “variation” requires the consent of the guarantor, since the carve-outs based on the Ankar principle apply in this case. In the decision of the Court of Appeal of Western Australia in Australia and New Zealand Banking Group Limited/. Manasseh (March 10, 2016) was the central theme of the legal nature and the effect of an amendment and reassessment. In the case, this was a request from the Bank as part of a guarantee granted at the time of the initial grant of the facility. The result was a victory for the guarantor, who successfully argued that the guarantee granted at the beginning of the facility would not be extended to amended investment agreements that were “modified and amended” at a later date. The decision will surprise many financiers and lawyers, who would generally view an “amendment and recovery” as a continuation of the existing facility agreement, rather than as a new agreement that terminated the old one.
The distinction can have radically different consequences, as has been the case here. “Lexology is a very relevant and interesting resource for south African interior lawyers. Information flows are a good measure of a company`s expertise and provide an interesting insight into the latest legal developments. I highly recommend it to Mr. Lexology. Clearer language in the correspondence, disclosed on the intended effect of the revised agreements, could, to some extent, have helped the bank, although the result would have been the same in light of the findings on the terms and conditions.