Asset Finance Law and Personal Guarantees in Equipment Financing

General Obligations Law §5-701(a)(2) generally requires a signed writing for a promise to pay another person's debt. In Salzman Sign Co. .. Beck, a boilerplate clause and corporate signature did not suffice. Key Equipment Finance v. South Shore Imaging enforced a separate guarantee signed by identified individuals.

Courts examine the wording, signature placement, individual identification, and signing capacity. A second signature is not invariably required, but the writing must clearly establish an intention to assume personal liability. This distinction matters when equipment finance and leasing documents combine company and individual obligations.

An unconditional payment guarantee may allow recourse against the owner without exhausting company remedies. A collection guarantee generally requires collection efforts first. Notice, cure, and waiver provisions may alter enforcement.

A limited guarantee may cap liability or cover one transaction. An unlimited or continuing guarantee may reach later advances, renewals, or charges. The guarantee, loan agreements, amendments, and releases define that coverage.

For secured loans, unpaid principal, default interest, late fees, and accelerated payments require contractual and legal support. True equipment leases have separate remedies under UCC §2-A-503, while §2-A-504 permits liquidated damages only when the amount or formula is reasonable in light of anticipated harm.

Sections 2-A-527 and 2-A-528 address accrued rent, discounted replacement or market-rent differences, incidental damages, and saved expenses. Future rent is not automatically recoverable in full without required credits and contractual limits.

UCC §1-203 looks beyond a contract's lease label. A nonterminable payment obligation combined with a term covering the equipment's remaining economic life or an ownership option for nominal consideration can create a security interest.

Secured transactions follow Article 9, including its disposition and deficiency rules. True leases generally follow Article 2-A's separate repossession and damages remedies. This classification changes the basis for calculating the obligations covered by a personal guarantee.

Repossession alone does not discharge secured debt. Under UCC §§9-620 and 9-622, valid acceptance of collateral in full satisfaction discharges the secured obligation, while partial satisfaction reduces it by the agreed amount.

Acceptance requires statutory consent and other conditions. Merely retaining equipment does not establish acceptance, so the guarantor should distinguish a completed sale, an acceptance agreement, and physical recovery.

For an Article 9 disposition, UCC §9-615 applies proceeds to permitted recovery and disposition expenses, followed by the secured obligation. A deficiency may remain when those proceeds are insufficient.

The creditor's accounting should identify the outstanding debt, recoverable costs, sale proceeds, and credited payments. The guarantee determines whether the owner remains responsible for the resulting balance.

UCC §§9-610 and 9-611 generally require commercially reasonable dispositions and notice to secondary obligors, subject to statutory exceptions. Under §9-624, a guarantor may waive disposition notice only through an authenticated agreement made after default.

In nonconsumer deficiency disputes, §9-626 places the burden of proving compliance on the secured party once the debtor or secondary obligor challenges it. If compliance is not established, the statute applies a rebuttable presumption about proceeds from a compliant disposition, potentially reducing or eliminating the deficiency rather than automatically cancelling it.

Relevant records include the signed guarantee, financing agreement, amendments, default notices, and payment ledger. After equipment recovery, disposition notices, sale accounting, or collateral-acceptance documents may also affect the claim.

These records can reveal excluded obligations, uncredited payments, releases, or improperly calculated charges.

Courts generally enforce clear, unconditional guarantees, and contractual waivers may restrict defenses arising from the company's obligations. Disputed execution, releases, and nonwaivable statutory rights require separate examination.

Fraud allegations or disagreements over charges need supporting evidence. Neither automatically invalidates an otherwise enforceable guarantee.