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Credit Contracts and Consumer Finance Act 2003

Enforcement and remedies - Orders, injunctions, and prohibited enforcement - Prohibited enforcement

100: Enforcement of guarantee prohibited

You could also call this:

"Guarantees can't be enforced if the law is broken, unless the court says it's fair"

Illustration for Credit Contracts and Consumer Finance Act 2003

You cannot enforce a guarantee if the court finds a breach of section 9C(4)(a), unless the court gives relief to the creditor. The court may give relief if it is fair and reasonable, considering things like the breach and the guarantor's ability to comply without hardship. You also need to consider any statutory damages paid or payable under section 91. You cannot enforce a guarantee before disclosure is made, if disclosure is required under section 25 or section 26. If someone does not comply with section 9C(4)(a) or section 25 or section 26, it does not affect their ability to enforce a consumer credit contract against the debtor. Not making disclosure to a debtor does not affect the ability to enforce a guarantee. If the court finds a breach, the creditor may apply for relief, and the court will consider all relevant matters. The court's decision will depend on the circumstances, including the nature of the breach and the guarantor's situation. You should look at the specific sections of the Act for more information about disclosure and enforcement.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM213181.

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Topics:
Money and consumer rights > Consumer protectionMoney and consumer rights > Banking and loans
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Part 4Enforcement and remedies
Orders, injunctions, and prohibited enforcement: Prohibited enforcement

100Enforcement of guarantee prohibited

  1. No person may enforce a guarantee after the court finds a breach of section 9C(4)(a) in respect of the guarantee, unless the court grants relief to the creditor under subsection (1AAB).

  2. The court may, on the application of a creditor under the consumer credit contract, grant relief from the effect of subsection (1AAA) if the court considers it fair and reasonable in the circumstances after having had regard to all relevant matters, including—

  3. the nature and seriousness of the breach:
    1. the ability of the guarantor to comply with the guarantee without suffering substantial hardship:
      1. any statutory damages that have been paid or are payable and the extent to which statutory damages have been, or are to be, extinguished or reduced under section 91.

        1. If disclosure is required to be made under section 25 or section 26, no person may enforce the guarantee before disclosure is made.

        2. Failure to comply with section 9C(4)(a) or section 25 or section 26 does not affect the ability of a person to enforce a consumer credit contract against the debtor.

        3. Failure to make disclosure to a debtor in accordance with this Act does not affect the ability of a person to enforce a guarantee.

        Notes
        • Section 100(1AAA): inserted, on , by section 38(1) of the Credit Contracts Legislation Amendment Act 2019 (2019 No 81).
        • Section 100(1AAB): inserted, on , by section 38(1) of the Credit Contracts Legislation Amendment Act 2019 (2019 No 81).
        • Section 100(2): amended, on , by section 38(2) of the Credit Contracts Legislation Amendment Act 2019 (2019 No 81).