Matters which creditor must disclose to guarantor meaning

Describes what a creditor must tell a prospective or existing guarantor (surety) about arrangements that affect the risk the guarantor assumes. The concept is drawn from case law rather than statute and is broadly consistent across England and Wales, Scotland, Northern Ireland and Ireland. A creditor has no general duty to volunteer all information. However, if the creditor and principal debtor agree any private bargain that materially varies the guarantor’s responsibility, the guarantor’s consent is required; without it, the guarantor is discharged at least for liabilities arising after the change (Holme v Brunskill). Accordingly, the creditor should disclose such variations, and, where relevant, the existence and nature of agreements with third parties that affect the guarantor’s risk or recourse (for example, standstills, subordination, payment holidays, releases of co-obligors or security that may prejudice subrogation). Creditors must also avoid misrepresentation and, in limited circumstances, disclose unusual or material facts known to them that the guarantor could not reasonably anticipate and which would influence their decision. Scots law recognises a broader good‑faith duty to cautioners in some settings (Smith v Bank of Scotland). In practice, modern guarantees include consents/waivers for variations and non‑disclosure, but these do not exclude liability for fraud or inequitable conduct.