Varying the underlying transaction

This guidance note explains the “Ankar” principle, which in broad terms, means that a guarantor will be released from a specific guarantee of the due performance of the principal debtor's obligations under a particular contract if the parties vary that contract in a way that is not insubstantial or incapable of prejudicing the guarantor. It then outlines when, in a financing transaction, will there be a variation of the underlying transaction.

This guidance note goes on to explain when the underlying agreement to a guarantee is amended, unless the guarantor has given prior consent to the variation, then the guarantee may be discharged, and the guarantor may be released. This means guarantor’s consent is essential, and this is illustrated by examples in selected case law. Example of wording that may be used when seeking a guarantor’s consent is also provided for legal practitioners’ reference.

See Varying the underlying transaction.