In the recent case of Ramsay v Love  EWHC 65 (Ch), the celebrity chef Gordon Ramsay (R) was found to be bound by a personal guarantee given to a landlord, even though he had not personally signed the guarantee document.
In broad terms, the lesson to take away is to be aware of what you are putting your name to. More specifically, the judgment confirmed that:
Where an agent is employed to act for a principal they can be given a wide range of authority. This can include binding their principal in contracts with third parties where such authority is given.
The provisions of the Law of Property (Miscellaneous Provisions) Act 1989 (LPA 1989) provide that a deed is only validly executed by an individual if:
A guarantee can be entered into other than by deed if it is in the form of a contract of indemnity.
A lease over 127-129 Parkway, London was granted to Gordon Ramsay Holdings International Ltd in February 2007. The lease was guaranteed by Gordon Ramsay Holdings Ltd and R personally. R’s signature, where required, was written on the counterpart lease by a “Ghostwriter Manual Feed Signature Machine.”
The machine was at the company offices and the company was run by H, the Chief Executive Officer of Gordon Ramsay Holdings and R’s father-in-law. R subsequently fell out with H and their dispute boiled over into litigation which was well publicised at the time.
R challenged the guarantee on the basis that his signature had been affixed by the machine and that the machine had been operated by H without his authority. It was accepted by both the landlord and R that the lease itself was valid. It was also accepted that the guarantee was valid if it was found that R had expressly authorised H to operate the machine.
On this second point, the judge specified that the guarantee in question was a contract of indemnity and not a deed so the execution provisions of the LPA 1989 did not apply.
The principal question for the court to decide, therefore, was whether H had sufficient authority to use the machine to sign the guarantee for R. On this point, the judge made the following findings:
Consequently, the guarantee was upheld and R remains a guarantor to the lease. With an annual rent of £640,000 per annum and over £1m in legal costs, R is in the soup!
To stay out of the soup always ensure that:
To do otherwise could be a recipe for disaster.