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Education
A bedeviling aspect of the PG should be limited. Triggers for personal liability tend
merchant personal guarantee is to relate to actual wrongdoing by the person giving the
guarantee, as other sources of harm are usually out of the
the issue of when it ends. In one person's control.
recent case, for example, a merchant Agent personal liability in agent agreements
had sold his business five years If an agent has not acted through a company, the agent
prior, but no one had bothered to is personally responsible for everything under their agent
have the PG removed agreement. Alternatively, some agent agreements will
stipulate that where the agent has signed as a company, the
principal of that company agrees to personally guarantee
businesses. When an ISO sells a portfolio of, say, 1,000 performance by the company under the agent agreement.
merchants, the person who owns the seller company is in a Again, such guarantors should consider the breadth and
very good position to (wrongfully) resolicit the merchants amount of the guarantee so as to avoid surprises.
that were just sold.
Like any guarantee, a personal guarantee is only as good
For this reason, it is common for owners of selling ISOs to as the assets behind it. That said, when you can lose
engage their personal liability—to a degree—with respect your savings, house and car because of a PG, it's worth
to sale transactions. Not that this kind of PG can be limited everything to think carefully before giving one.
in scope and in amount. For example, the parties might
negotiate that the personal liability of the owner of the In publishing The Green Sheet, neither the author nor the publisher is
selling ISO will be limited to the amount of the purchase engaged in rendering legal, accounting or other professional services.
price or some fraction of the purchase price. If legal advice or other expert assistance is required, the services of a
competent professional should be sought. For further information on
Whenever accepting a personal guarantee it makes this article, please contact Adam Atlas, Attorney at Law via email at
sense to question whether the scope and amount of the atlas@adamatlas.com or by phone at 514-842-0886.
