UNLESS AGREED, NOTICE NOT NEEDED BEFORE COMMENCING PROCEEDING AGAINST PRINCIPAL DEBTOR

The fact that the obligations of the guarantor arises only when the principal debtor has defaulted in his obligations to the creditor does not mean that the creditor has to demand payment from the principal debtor or from the guarantor or give notice to the guarantor before the creditor have to commence proceedings against the principal debtor unless there is an express terms in the contract requiring him to do so. See C.B.N V INTERSTELLA COMMUNICATIONS LTD (2018) 7 NWLR (Pt. 1618) 294 at 494. — M.L. Shuaibu, JCA. Ekpo v GTB (2018) – CA/C/324/2013

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WHEN IS A DEBT SAID TO HAVE ARISEN?

In AG Adamawa State & Ors. V. AG Federation (2014) LPELR – 2322 (SC), the Supreme Court per Muhammed JSC, had reiterated inter alia thus: “In financial terms, any amount of money which is still owed after some payment has been made is what is called a balance. It remains a debt on the neck of the debtor. Limiting it to financial dealings, ‘debt’ … represents a sum of money due by certain and express agreement. It is a specified sum of money owing to one person from another, including not only obligation of debtor to pay, but right of creditor to recover and enforce payment.”

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CREDITOR CAN PROCEED AGAINST A GUARANTOR FOR DEBT GUARANTEED

I dealt with the meaning of a Guarantee and referred to the case of Trade Bank PIc v. Khalid Barakat Chami (2003) 13NWLR (Pt.836) 158 @ 216. I also referred to Fortune International Bank PIc v. Pegasus Trading Office (GmbH) and @ Ors. (supra) – Where it was stated by Uwaifo, JSC, that the tendency is that the law appears to have moved to the centre to make the right of the creditor less conditional. That the creditor is now entitled to proceed against the guarantor without or independent of the incident of the default of the principal debtor. I also referred to the observation of Ayoola, JSC, in the case of African Insurance Development Corporation v. Nigeria (LNG) Liquefied Natural Gas Ltd. (2000) 4 NWLR (Pt.653)494 @ 505-506; (2000)2 SCNJ, 119; (2000) 2 S.C. 57. I then stated that it is settled that the liability of a guarantor becomes due and mature immediately the debtor/borrower becomes unable to pay its/his outstanding debt. That the guarantor’s liability is then said to have crystallised. I referred to some other decided authorities in this regard and stated that a Surety or Guarantor, is bound by the written agreement it/he entered into. – Ogbuagu JSC. Nwankwo v. Ecumenical (2007)

WHAT IS A SECURED DEBT

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UNLESS AGREED, NOTICE NOT NEEDED BEFORE COMMENCING PROCEEDING AGAINST PRINCIPAL DEBTOR

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WHEN IS A DEBT SAID TO HAVE ARISEN?

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CREDITOR CAN PROCEED AGAINST A GUARANTOR FOR DEBT GUARANTEED

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