Opinion ID: 2669470
Heading Depth: 2
Heading Rank: 2

Heading: Lack of Consideration for the Guaranty

Text: Gainey contends that the personal guaranty is invalid for failure of consideration. He seems to be arguing that because he did not receive any personal benefit in his individual capacity, the personal guaranty cannot be valid. He argues that any consideration for the January 19, 2005, deal was provided to the corporation, Super Service, not to him personally. First, the plain language of the guaranty says it was given in return for valuable consideration. Plaintiff’s Ex. 2. Gainey argues that because the guaranty is a separate document from the lease agreements, there must be separate consideration to support the guaranty. This is not so. The 2005 personal guaranty was a condition of General Electric Capital renewing the earlier lease agreement with Super Service for continued use of the trailers. Generally, renewal of an agreement is sufficient consideration to support a guaranty executed after the date of the original agreement. Restatement (Third) of Suretyship and Guaranty § 9, at 35 (1986). The same consideration that supported the lease agreements supported the guaranties. -6- Case No. 12-2671 Gen. Elec. Cap. Corp. v. Gainey Furthermore, adequate consideration is given to guarantors by execution of the principal contract contemporaneously with the execution of the guaranty. W. T. Rawleigh Co. v. Trerice, 195 N.W. 79, 82 (Mich. 1923). The lease agreement with Super Service executed contemporaneously with the personal guaranty on January 19, 2005, was for new Volvo tractors at a cost, financed by General Electric Capital, of $2,050,381. By making the additional credit available to Super Service to purchase the tractors, sufficient consideration was given for both the new indebtedness and the prior indebtedness.