Hong Kong Bank V. New Age Demographics

Plaintiff: Hong Kong Bank
Defendant: Margaret Chronister

Facts:
• Defendant made a personal guarantee on the loan of funds to her husband’s company, New Age Demographics, provided by Plaintiff
• The company could not repay the debts outstanding, and subsequently defaulted on the loans
• The defendant, who is thus held liable on the debt due to her signing of the loan guarantee, claims that the guarantee is unenforceable (as it provides no direct benefit for her, and therefore has no consideration.)
• This motion is by the plaintiffs seeking enforcement of the guarantee for repayment of the loan plus applicable interest.

Issues:

1. Is there consideration for the guarantee?
2. Does the signing of the contract without an affixed wafer constitute signing under seal?

Law:
• Consideration is not restricted to the exchange of money. A bargain may involve the exchange of anything the parties to k think is of value
• The consideration Promisor receives need not be for his own benefit, so long as Promisor bargains for other party to do something or promise to do something that the other party would otherwise not do, Promisor has received consideration
• When contracts are signed under seal, there is no need to establish consideration for promises of the agreement.

Application:

1. In this case, the Plaintiff would not have approved of the loan to David Cran without the Defendant’s guarantee. The fact that the Bank did something that it would otherwise not have done (provide the loan), the defendant has received consideration.

2. Contracts which state that they are “under seal” and are notable of this condition will be held to be under seal, even in the event that the formal seal has not be placed on the document when signed.

Decisions:

1. Consideration was given to Ms. Chronister for her