How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Thomas Your Own Question
Thomas, Lawyer
Category: UK Law
Satisfied Customers: 7617
Experience:  BA (Hons), PgDip, Practising Solicitor
Type Your UK Law Question Here...
Thomas is online now
A new question is answered every 9 seconds

I have lent a director of a business some money. He verbally

This answer was rated:

I have lent a director of a business some money. He verbally promised in front of witnesses that what ever happened even if the company went bust I would not lose any money. The company has gone into liquidation, is the debt enforceable ?

Did you lend the money to the director in his personal capacity, or to the limited company with the director simply having arranged it on behalf of the company?

Customer: replied 3 years ago.

Hi Thomas


I paid some of his business debts.

He asked me for help with the intention of me becoming a director... in front of the company accountant. He said 'Dave I guarantee if the company goes bust you will not lose any money I will pay you back personally'





Hi Dave,

Do you have a written agreement in respect of the loan?

If so, who is listed as the borrower?

Customer: replied 3 years ago.

Hi Thomas


No unfortunately I don't have a written agreement but he has admitted lately that he made the promise



Right, thanks Dave.

The importannt distinction here is whether you lent him money in his personal capacity, or whther you lender to the limited company which he accepted as director.

The statement that you have confirmed he said seems to indicate that it was lent to the limited company (albeit with a possible guarantee from him).

Is this what you understood the arrangement to be?

Customer: replied 3 years ago.

Well, I assumed I was lending him the money personally.. to assist him with cash flow in his business. He said the debts were not that bad and there was a very busy order book. when they had dates for the work there would be a position for me in the business. But he personally owed me the money.



Drafting your answer now.

5 mins.


Thanks for your patience.

Whilst a legal loan agreement can be verbal the problem is that it leads to uncertainty as to the terms. This is what we have here.

The difficulty is that the director can either contract with you personally, or he can contract the company by acting on the company’s behalf. It’s not clear which it is, frankly.

If he has contracted with you personally then you would be able to enforce the debt by suing for money judgement against him at county court.

If he has contract the company by acting as a director then the borrower would be the company. You would only be able to sue him personally if he had guaranteed the loan personally.

The circumstances (with director and company accountant) seem to suggest that it was the company that you were lending the money too. The statement of the director appears as if the director also believed that you were lending the money to the company.

However, the statement of the director seems to suggest that he would incur personal liability. This might be enforceable as a guarantee if the statement was made to you before you transferred the money and contracted with him, if it was made so as to induce you to transfer the money.

It’s very difficult to discern, frankly, and there’s a lesson to learn here about getting things in writing (however brief). However, if I were pushed I would suggest that you probably lent the money to the company but (if the guarantee statement was made before you did) with a guarantee from the director.

If the company is in liquidation then you don’t stand much chance of getting the money back from the company and so you would probably be better off attempting to claim the money from the director personally by claiming he have you a guarantee.

Please remember to RATE my answer OK SERVICE, GOOD SERVICE OR EXCELLENT SERVICE or above if you are satisfied that you have received the correct legal advice (even if it is not the answer you wanted to hear), otherwise I do not receive any credit for answering your question.

If you are not willing to rate my answer as OK SERVICE, GOOD SERVICE OR EXCELLENT SERVICE then allow me to assist further by replying asking what clarification you require rather than rating my answer at levels below.

If you wish for me to provide you with further guidance on any question you may have in the future then please submit a further question to the board requesting me either by my profile or by marking your question. “FAO Tom”.

Kind regards,

Thomas and other UK Law Specialists are ready to help you