Michael Howlin QC of the Hastie Stable attended the half-day banking-law conference entitled "Trouble at Bank" on 8 May 2014 and delivered a talk called "Collateral Warranties and Other Devices: Borrowers and Guarantors Strike Back". The talk dealt with the Carlyle case (Bank of Scotland plc -v.- William Derek Carlyle) at first instance and in the Inner House and ventured a guess as to the possible disposal of the ensuing appeal to the Supreme Court. Thereafter, the main topics were (1) rules for the interpretation of guarantees (particularly the "strict interpretation" rule and the "contra proferentem" rule) and (2) implied terms in banking documents (with a consideration of the effect of section 1(3) of the Contract (Scotland) Act 1997). The talk was illustrated with authorities from Scotland, England (Privy Council), Ireland, Australia and Canada and concluded with a warning about the possible knock-on effect for a bank if a widely-used standard form of guarantee were found to be ineffective. Among other things, the invalidation of widely-used guarantees might undermine a bank's Tier-2 capital.
Michael says: "The main thing I wanted the audience to take away with them was that the legal arguments which defenders have been advancing to resist claims under loan agreements, facility letters and bank guarantees, etc. - particularly, perhaps, since the economic downturn in 2008 - are generally not specific to banking law. By and large, they are elementary features of contract law which every lawyer will have come across during his or her first year at university. They have just been dusted off and reused.
A copy of the full text of Michael's talk is available from the clerking staff.