Bank of India v Riat

Guarantee – Misrepresentation. A bank sought to enforce two limited guarantees signed by the defendant, as security for facilities provided by the bank to a property development company owned by the defendant and his son. The defendant contended that he was entitled to rescind the guarantees on the grounds of misrepresentation and economic duress. The Chancery Division, in granting the bank's claim, and in dismissing the counterclaim, held that, whilst, in principle, a statement by a bank or other financial institution that it wanted to increase its exposure in a particular business sector might, if untrue, be capable of providing the basis for a claim in misrepresentation, the defendant had, on the facts, failed to establish that defence or economic duress.

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