WHEN A SIGNATURE BECOMES A LIABILITY: UNDERSTANDING THE CONCEPT OF GUARANTORSHIP UNDER NIGERIAN LAW1
1. Introduction
The concept of Guarantorship is often taken for granted in Nigeria. The seemingly small request we now hear from friends, family members or even colleagues can be captured in the following sample appeal:
“I collected one small loan, and I need you to be my guarantor. Please just sign here, I already know how to pay back; it will not be a big deal.”
A small favour done in good faith could later become an attack on a person whose signature carries legal and financial weight. Signing as a guarantor for a loan, lease, job, or business deal is a high-stakes decision. Your signature legally binds you to answer for another party’s failures, potentially costing you a fortune. Demystifying the rules of guarantorship can save you from devastating losses and decades in court.
This article examines the legal concept of Guarantorship and who a guarantor is; what the law says about a person standing in as a guarantor; what to consider before agreeing to be a guarantor; and the role of law enforcement agencies in debt recovery, because many guarantors do not appreciate the responsibility attached to the role and would only do so when the principal debtor has failed in fulfilling his promise and the creditor has taken steps to recover the money owed.
2. Guarantorship is More Than a Signature
A guarantee is a legally enforceable promise by one person to answer for the debt, liability and default of another if that person (principally liable) fails to perform his obligation. The Supreme Court held in the case of Chami v. UBA Plc2 that a guarantee is a written undertaking by one person to be responsible to another where a third party fails to perform a specified obligation.
The concept of a guarantee has received consistent judicial consideration in Nigerian jurisprudence. Although the courts have approached its definition from slightly different perspectives, the authorities substantially converge on the essential character of a guarantee, as an undertaking by one person to answer for the obligation or default of another. When read together, these judicial pronouncements provide a composite understanding of what a guarantee is and the essential elements that must be present for a transaction to properly assume that character.
The foundational nature of a guarantee was appraised in Eboni Finance & Securities Wole-Ojo Technical Services,3 where the court held that a guarantee is an accessory contract by which the guarantor undertakes to be answerable to the creditor for the debt, default or miscarriage of another person whose primary liability to the creditor must exist or be contemplated. This definition is particularly significant because it emphasises the accessory nature of a contract of guarantee. A guarantee does not ordinarily exist in isolation; rather, it is ancillary to a primary obligation owed by another person. Thus, the guarantor’s undertaking is connected to the liability of the principal debtor or obligor. The existence or, at least, the contemplation of a primary liability is therefore central to the juridical character of a guarantee.
The same underlying principle was expressed from a different perspective in R. E. A. v. Aswani Textile Industries Ltd.4 where the court described a guarantee as a written undertaking made by one person to a second person to be responsible if a third person fails to perform a certain duty, e.g., pay a debt. What is of importance is the financial position of the guarantor and not the financial inadequacy of the person guaranteed. While the case of Eboni Finance focuses on the relationship between the guarantor and the principal debtor, Aswani’s Case brings into sharper focus the parties and commercial purpose of the undertaking. The above definition demonstrates that a guarantee involves a tripartite relationship which includes the guarantor, the creditor or promisee, and the principal debtor whose obligation is being guaranteed. It also highlights the commercial rationale for requiring a guarantee which is the creditor’s reliance on the guarantor’s ability to meet the obligation in the event of the principal debtor’s default. In this sense, the guarantor provides additional financial assurance rather than becoming the primary debtor in the first instance.
The requirement of form and proof was further underscored in Saraki v. Societe Generale Bank5 where the Court of Appeal held that a guarantee of the nature contemplated in that case must be in writing and that the memorandum evidencing the guarantee ought to have been tendered in evidence. Relying on Aswani’s Case, the Court reiterated that a guarantee is a written undertaking made by one person to be responsible if a third person fails to perform a certain duty, for example to pay a debt. The contribution of Saraki v. Societe Generale Bank is therefore distinguishable primarily on the basis of formalization and evidential enforceability. Whereas the case of Eboni Finance explains the accessory legal structure of a guarantee and Aswani’s Case explains the nature and commercial purpose of the guarantor’s undertaking, Saraki’s Case draws attention to the importance of reducing such an undertaking into a form capable of being proved and enforced.
Ultimately, these authorities should not be regarded as laying down divergent concepts of a guarantee. Rather, they collectively articulate different dimensions of the same legal institution. A guarantee is therefore, in substance, an accessory undertaking by which a guarantor agrees to answer to a creditor for the debt, default or other failure of a principal obligor. Its defining features include the existence or contemplation of a primary obligation, an undertaking by the guarantor to assume responsibility upon the default of another and is captured in a written instrument capable of evidencing that undertaking. Taken together, these features form a coherent judicial framework for understanding both the legal nature and essential incidents of a contract of guarantee.
3. The Misconception Around Guarantorship
One of the most prevalent misconceptions surrounding Guarantorship is the belief that acting as a guarantor is merely a formality or an act of goodwill undertaken to assist a friend, relative or business associate. This misconception is often reinforced by the fact that the guarantor was not the person who directly obtained the loan or entered into the principal transaction. Consequently, many guarantors assume that because the principal debtor is the person who received the benefit of the transaction, any liability arising from it should be limited to that debtor.
The law, however, takes a fundamentally different view. A guarantee is not merely a moral assurance of another person’s reliability or an expression of personal support; it is a legally binding undertaking capable of exposing the guarantor to substantial liability. Although a person may agree to act as a guarantor out of friendship, family ties or personal loyalty, such motivations do not diminish the legal consequences of the commitment undertaken. Indeed, a guarantee creates a distinct contractual relationship between the guarantor and the creditor, separate from the underlying relationship between the creditor and the principal debtor. It is this separate undertaking that gives the creditor the right, subject to the terms of the guarantee, to enforce the guarantor’s obligations where the principal debtor fails to perform the obligation guaranteed.
Another common misconception is that a guarantor’s liability is remote and will only arise after the creditor has exhausted all available remedies against the principal debtor.6 This is not necessarily the position in law. Subject to the terms and nature of the guarantee, the liability of a guarantor may crystallize upon the default of the principal debtor, and the creditor may, in appropriate circumstances, proceed against the guarantor without first commencing proceedings against or exhausting remedies against the principal debtor. A guarantor should therefore not regard himself or herself as a mere bystander to the principal transaction simply because he or she did not personally receive the loan or benefit from the underlying agreement.
It is the opinion of this author that the most significant misconception about Guarantorship is the belief that a guarantor assumes only a peripheral or limited responsibility because he or she was not the principal debtor. This belief fails to appreciate the commercial and legal purpose of a guarantee. By agreeing to stand as guarantor, an individual undertakes a serious contractual responsibility and may be required to answer for the consequences of the principal debtor's default. While the precise scope of a guarantor’s liability will always be determined by the terms of the guarantee, the decision to provide one should never be approached casually or regarded as a mere favour. A prospective guarantor must carefully consider the nature and extent of the obligations being assumed, as the consequences of default may expose the guarantor to significant financial and legal liability.
The foregoing position also captures an important distinction which is that a guarantor does not necessarily become liable simply because the debtor owes a debt; rather, the guarantor becomes liable in accordance with the terms of the guarantee upon the occurrence of the circumstances that trigger that liability. Therefore, rather than saying that a guarantor automatically “inherits all the debts, liabilities and promises” of the debtor, it is more legally precise to state that the guarantor assumes responsibility to the extent and in the manner stipulated in the guarantee agreement.
4. Can a Creditor Proceed Directly Against a Guarantor?
This question is answered in the affirmative. A creditor is not obligated to explore other means before the loaned sum is paid. A creditor can also do so without prior notice to a guarantor. There is no law that mandates a creditor to exhaust all options available to him in recovering the debt owed to him before proceeding against a guarantor. The
law allows a creditor to recover the loan from a guarantor as soon as there is a breach, which has been earlier established in this paper. The law does not provide for prior demand on the borrower or the commencement of separate proceedings against the principal debtor before enforcing the guarantee. This position is to further emphasize the security provided for the creditor to recover whatever debt owed in the event that the principal debtor defaults.
It is also important to note that there is no universal guarantee agreement. The enforceability of any guarantee depends on the document signed. Guarantee agreements could be limited to fixed amounts, fixed or floating charges while others could go as far as including penalties, legal fees or other costs. Some guarantee agreements could cover only fixed contracts whereas others could extend to future contracts as long as the creditor is willing to give and the debtor keeps receiving. Another important thing to note as a guarantor or an intending guarantor is the fact that standing in as a guarantor is not a decision that should be made solely on trust. The exact wordings of the guarantee should be first read and understood to appreciate the extent of the initial agreement and the level of responsibility the guarantor is to take-up.
5. The Risk Associated with Employment Guarantee
Guarantor-ship frequently arises in employment transactions, particularly where an employer requires an intending employee to provide one or more guarantors as part of the conditions for employment or confirmation. While such requirements may initially appear to be merely for the purpose of confirming an employee’s identity, character or reliability, the responsibilities attached to an employment guarantee can extend far beyond these considerations. Depending on the nature and terms of the employment, a guarantor may assume liability for losses arising from the employee’s fraud, theft, negligence, misconduct or other defaults occurring during the course of employment.
The risks associated with employment guarantees are therefore significant and should not be underestimated. A guarantor may find himself exposed to substantial financial liability where the employee defaults in the performance of obligations covered by the guarantee. As illustrated in the case of Barakatarris Nigeria Limited v. Dr. Ufuoma Akparorue & Ors.7 the Claimant sought to hold the employee’s guarantor liable for losses allegedly arising from the employee’s failure to account for company goods. The case demonstrates that an employment guarantee can create real financial exposure and is not merely a moral assurance of an employee’s good character.
However, the risks are not limited to the guarantor alone. An employer seeking to rely on an employment guarantee must also recognise that its own conduct may affect the enforceability and scope of the guarantee. In the case under consideration, the guarantors argued that the employer contributed to its loss by continuing to release goods to the employee despite an alleged outstanding balance. There were also arguments that a change in the underlying arrangement, without the knowledge or consent of a guarantor, could affect the guarantor's continued liability. This highlights the importance of proper internal controls and careful management of the employment relationship by an employer.
Ultimately, the extent of a guarantor’s liability will depend largely on the terms of the undertaking and the circumstances surrounding the alleged default. It is therefore important for every guarantor or intending guarantor to thoroughly read and understand the employment guarantee and, where necessary, the relevant terms of the employment contract before assuming such an obligation. A person should be fully aware of what is being guaranteed, the extent of the potential liability, and the circumstances in which that liability may arise. An employment guarantee should not be signed simply as a favour or as a routine formality, as the consequences may extend to substantial financial and legal exposure.
6. Rights of a Guarantor and Reducing the Risks Attached to a Guarantee
Before signing a guarantee, there are certain prudent though sometimes uncomfortable questions that every prospective guarantor should ask which should include:
- What exactly am I guaranteeing, and what is the full extent of my liability?
- Does the guarantee extend to future indebtedness?
- What security has the debtor provided and does the debtor have sufficient assets to reimburse me if I am called upon to pay?
- Am I financially capable of satisfying the obligation if the debtor defaults and am I genuinely prepared to bear the consequences if the transaction goes wrong?
These are not questions to be taken lightly. A guarantee should never be treated as a mere formality or an act of goodwill, as doing so may leave the guarantor bearing the financial consequences of another person's default. In practical terms, a prospective guarantor should approach the transaction with the same level of caution as if he or she were personally taking the loan.
The risks attached to a guarantee can, however, be managed. A guarantor should carefully review all documents relating to the transaction, retain copies of the executed agreements, and where possible, negotiate a clear monetary limit beyond which liability cannot extend. It is also advisable to obtain a written undertaking from the principal debtor to reimburse any sum paid by the guarantor on the debtor’s behalf and to remain informed about the debtor’s repayment obligations. Importantly, a guarantor who satisfies the debt may, through the equitable doctrine of subrogation,8 step into the shoes of the creditor and enforce the creditor’s rights against the principal debtor to recover what has been paid. A guarantor may also challenge liability where the guarantee was procured through fraud, misrepresentation, undue influence or duress. Ultimately, the best protection begins before the signature is appended. Obtaining proper legal advice and understanding the precise obligations being undertaken may save a guarantor from years of financial exposure and costly litigation.
7. The Role of Law Enforcement Agents in Debt Recovery
The recovery of a debt, particularly one arising from a loan, guarantee or other contractual relationship, can often become contentious when the debtor fails or refuses to fulfil his obligations. In such circumstances, creditors may become impatient and resort to the use of law enforcement agents to pressure the debtor into making payment. This practice may involve harassment, intimidation, arrest or detention, sometimes under the guise of investigating a criminal complaint. However, where the underlying dispute is purely civil, the use of the coercive powers of law enforcement agencies as a means of recovering a debt has been strongly condemned.9 The fact that a person owes money does not, without more, transform a civil obligation into a criminal offence. As such, the appropriate remedy for a creditor seeking to recover a debt lies in the lawful procedures provided by the legal system and not in self-help or the intimidation of the debtor.
The courts have consistently maintained that the police should not be used as debt collectors or as instruments for settling private disputes. As was held in Ezeigbo v. Ikechukwu & Ors.10 the Court of Appeal reiterated that the police do not have any business in helping parties recover money that is being owed to them. In Chief Francis Igwe & Ors. v. Mr. Goddy Ezeanochie & Ors.11 the court emphasized that although a person may be entitled to recover what is owed to him, such recovery must be pursued through legally approved and civilised means that do not infringe upon the rights of others. Similarly, judicial decisions have condemned the practice of inviting the police to intervene in matters that are purely civil in nature and warning that a private individual who sets the police in motion to settle a private score may himself be liable for the resulting wrongful acts. This principle extends beyond the Nigeria Police. The powers conferred on the Economic and Financial Crimes Commission (EFCC) are restricted when it comes to investigating or resolving disputes arising merely from simple contracts or other purely civil transactions.12 Law enforcement agencies are therefore expected to scrutinise complaints carefully and distinguish genuine criminal conduct from attempts by creditors to use the machinery of criminal justice as a shortcut for debt recovery. The use of an allegation of criminal wrongdoing as a pretext to compel payment of an ordinary debt is particularly troubling, as it exposes individuals to coercion and potentially infringes their fundamental rights.13
The consequences of such conduct may also extend beyond the law enforcement officer involved. Where a creditor instigates the arrest or detention of a debtor, guarantor or surety in connection with the recovery of a civil debt, both the officer and the person who set the process in motion may face liability where the arrest or detention is unlawful. This is especially significant in the context of guarantees, as a guarantor’s contractual liability should not be confused with criminal responsibility. Even where a guarantor has assumed an obligation to answer for the debt or default of another, the creditor must still pursue any claim against the guarantor through lawful and legally recognised means.
The law does not deny a creditor the right to recover a legitimate debt; rather, it insists that the right be exercised through proper channels. Depending on the circumstances, these may include a formal demand for payment, negotiation, mediation, arbitration or litigation. The desire to recover a debt, however genuine, cannot justify the use of arrest, detention or intimidation as a substitute for the established processes of law. A creditor's right to recover what is owed must therefore be balanced against the debtor's or guarantor's right to personal liberty and dignity. The rule of law demands that debt recovery remain a civil process and that the powers of law enforcement agencies are not converted into tools for enforcing private contractual obligations.
8. Lessons for Prospective Guarantors
Always bear the following in mind before agreeing to become a guarantor for anyone:
- Read and understand every clause in every document before appending your
- Never assume you know the content of any document even if you have been told it says something It is always best to exercise due caution before taking such bold steps.
- Understand the financial implication of being a guarantor. It could cost you all you have and all you have ever worked for.
- Always put all assurances and agreements in writing. Oral contracts are hard to enforce because it is difficult to prove the exact terms. Have something you can lay claims on for the basis of your argument.
- Always seek legal Contact a lawyer every step of the way.
9. Conclusion
Guarantor-ship is an undertaking that deserves far greater consideration than it is often given. What may begin as a simple request to “just sign” can result in a legally binding obligation with financial and personal consequences. The willingness to assist a friend, family member, colleague or employee is understandable, but good intentions do not diminish the legal effect of a guarantee. Once a person appends his or her signature, the commitment becomes one that may have consequences beyond the relationship of trust that gave rise to it. The decision to become a guarantor should be treated as a financial and legal decision, not merely a personal favour. Trust may be the reason for agreeing to stand for another person, but trust alone cannot protect a guarantor from the consequences of a poorly understood or excessively broad undertaking. The prudent approach is to ask questions, examine the terms, understand the possible consequences, obtain appropriate advice and where possible, ensure that adequate safeguards are in place before signing.
The most important lesson is therefore the need for informed consent and caution. A prospective guarantor should not approach a guarantee on the assumption that the obligation belongs entirely to the principal debtor or that liability will only arise after every possible avenue against the debtor has been exhausted. The extent of the guarantor’s responsibility is determined by the terms of the undertaking and the circumstances in which liability is triggered. For this reason, understanding the document before signing it is not merely advisable; it is fundamental to protecting one’s interests. The risks become even more pronounced where guarantees are required in employment or other commercial relationships.
A person who agrees to guarantee another may be exposing personal assets and financial resources to consequences arising from conduct over which he or she has little or no control. This makes it essential to consider not only the person being guaranteed, but also the nature of the obligation, the extent of the potential liability and the safeguards available to the guarantor. A guarantee should never be viewed as a routine requirement simply because it is commonly requested or because others have signed similar documents without apparent difficulty.
At the same time, the existence of a contractual obligation does not remove the protections afforded by law. A creditor is entitled to pursue a legitimate claim, but that right must be exercised through lawful means. Contractual liability should not be confused with criminal responsibility, and the machinery of law enforcement should not become a substitute for the established processes of debt recovery. The rule of law requires that the rights of creditors be balanced with the rights and dignity of those against whom claims are made.
There is nothing wrong with helping another person. However, helping someone should not mean unknowingly placing oneself in a position of avoidable financial exposure or prolonged litigation. The few minutes spent reading and understanding a guarantee may prevent years of dispute, financial loss and regret. Before putting a signature on paper, a prospective guarantor must understand that the signature is not simply evidence of trust in another person; it is a commitment to assume responsibility if that trust fails.
Footnotes
1 Yewande F. Shoyemi, NYSC Associate, Cross-Departmental, S. P. A. Ajibade & Co., Abuja, Nigeria.
2 (2010) 6 NWLR (Pt. 1191) 474 (SC).
3 (1996) 7 NWLR (Pt. 461) 464 at p. 476.
4 (1992) 23 NSCC (Pt. 1) 389 at p. 396.
5 Saraki v. Societe Generale Bank (1995) 1 NWLR (Pt. 371) 325 at p. 345, per Sulu-Gambari, JCA.
6 Francis Igho Erhiakporeh, ‘The Guarantors’ Prayers – Why a Contract of Guarantee is not a mere Formality’ (Mondaq, May 2020) available at https://www.mondaq.com/nigeria/litigation-contracts-and-force-majeure/947762/the-guarantors-prayers-why-a-contract-of-guarantee-is-not-a-mere-formality accessed 26 August 2026.
7 Unreported Judgement in Suit No. NICN/ABJ/232/2021 between Barakatarris Nigeria Limited v. Dr. Ufuoma Akparorue & 2 Ors., delivered by Honourable Justice E. N. Agbakoba, J. of the National Industrial Court, Abuja Judicial Division on 27th June 2023 (hereinafter referred to as “Barakatarris’ Case”). This Judgement can be accessed via https://www.nicnadr.gov.ng/nicnweb/details.php?id=8144&p=Barakatarris%20Nigeria%20Limited-%20-VS-%20Dr.%20Ufuoma%20Akparorue%20&%202%20ORS accessed 27 August 2026.
8 Equitable subrogation is a legal doctrine rooted in equity that permits a party who pays a debt for which another is primarily liable to assume the rights, remedies or securities of the original creditor.
9 David G. Enang, ‘What it Truly Means to be a Guarantor and Why the Police Have no Business Getting Involved’ (The Gong, 15 September 2025) available at https://www.thegong.com.ng/what-it-truly-means-to-be-a-guarantor-and-why-the-police-have-no-business-getting-involved/ accessed 6 August 2026.
10 (2019) LPELR – 48445 (CA).
11 (2010) 7 NWLR (Pt. 1192) 61.
12 Ubaka Victor Onyemelukwe, ‘EFCC is not a Debt Recovery Agency: Reviewing the Constitutional Limits of the EFCC in Civil Transactions Diamond Bank Plc v. HRH Petrol Continental Nig. Ltd. and Anor. (2018) LPELR-SC 375/2012 in Perspective’ (The Nigerian Lawyer, 5 February 2019) available at https://thenigerialawyer.com/efcc-is-not-a-debt-recovery-agency-reviewing-the-constitutional-limits-of-the-investigatory-powers-of-the-efcc-in-civil-transactions-diamond-bank-plc-v-hrh-eze-petrol-contnental-ni/ accessed 5 September 2026.
13 Dennis Odigie and Okpako Omudhowo, ‘Law Enforcement Agents and Debt Recovery in Nigeria: Socio Legal Consideration’ (2025) (2) WDULJ available at https://www.wdulawjournal.com/index.php/wdulj/article/viewFile/141/73 assessed 26 August 2026.
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