The decision will surprise many financiers and lawyers who would normally consider a “modification and reformulation” as a continuation of the existing facility agreement rather than a new agreement that ended the old one. The distinction can have radically different consequences, as has been the case here. The other member of the Court found that there had indeed been an amendment which did not resolve the previous agreement and therefore did not arise from the guarantor`s agreement. However, his honour ruled in favour of the guarantor, as the “variation” required the agreement of the guarantor, the carve-outs based on the Ankar principle having been applied in this case. Many changes can be made to the terms of a trade finance facility during its lifetime. They are sometimes included in a brief amendment document that contains only the corresponding changes. There may be a number of them over time, and for more complex and long-term transactions, it is common for the original facility agreement, with its amendments, to be “modified and adjusted” at some point in time – in other words, consolidated and included in a single document. It`s as much for ease of reading as everything else. In the Manasse case, two of the three members of the Court found that the “amendment and reformulation” contributed to the replacement (and thus at the end) of the old facility agreement which referred to the guarantee.

Since the guarantor had not given his consent to the replacement body, his guarantee did not extend to it. The bank claimed that a guarantee given for the purposes of the facility, as initially documented, extended to the “modified and adapted” facility agreement that came into force as a result of defaults as a global financial crisis. It was a lot about the interpretation of the facility documents and the guarantee itself, although the case is as interesting for financiers, lawyers as it is for guarantors, given that it was a standard guarantee used by one of the four big banks and the situation is frequent in practice. The Bank`s case did not help the fact that it had given the guarantor a form of consent that was refused and that it must therefore be satisfied with the argument that the agreement it needed as a precondition for the amendment was indeed not necessary. Overall, the outcome depended on the correct classification of the agreements documented in the “amendment and reformulation”: in its decision, the Court reaffirmed the recognised principle that an agreement to “amend” an existing agreement can either modify the existing agreement without altering its existence, or terminate and replace the existing agreement. This question is based on the objective intentions of the parties. . . .