Whether a transaction is brought about by the exercise of undue influence is a question of fact. Here you say there was a relation of “trust and confidence” between those two persons giving personal guarantees on behalf of the borrower company, namely a husband who was the de facto “finance director” of the borrower company and you, his wife, who did not take part in financial decisions and relied on him.
Even though you assert that your husband dealt with all the financial side of the business, I have to say that at all times you were a director as well, so the loan company seeking to enforce the debt will push that point in terms saying your official role demonstrates your close involvement in company matters.
Your evidence that your husband said “sign here” and you obliged without question is compelling, but it would help if a third party (such as your accountant or others who observed your business in action) could independently verify that assertion. Likewise, you saying you have dyslexia would be best supported with an official diagnosis by a suitably qualified professional.
After a series of cases where banks lost out when wives argued the matrimonial home should not be repossessed in situations where the husbands had borrowed money (including RBS plc v Etridge 2001) a protocol was developed by lenders where money will not be advanced unless all legal owners or occupiers of a property have expressly given consent to any borrowing secured against it, with such consent being demonstrated by all parties taking independent legal advice.
Here the lender was not taking a charge over your house, so that protocol appears to have been more relaxed, in that the lender merely recommended you take independent legal advice and did not insist upon it. However, on the apparent facts of your case, I can see such relaxation of best practice and failure to address the issue of presumed undue influence where there is a relationship of trust and confidence, has played to your advantage.
Unless the lender can defeat your argument that there was undue influence, there is no need for you to agree to a charge over your house, or indeed repay the debt. This is because you may assert that your particular circumstances render void the personal guarantee you signed.
Ask a Lawyer is written by Gary Rycroft, solicitor at Joseph A Jones & Co, and published twice a month on Mondays. Email your questions to firstname.lastname@example.org