Reviewing a trade credit account application with a personal guarantee

A trade credit account application is the supplier's contract for every order the customer will ever place with it, with the supplier's terms of business incorporated by a signature on the form and a personal guarantee from the director printed on the back. It is signed to open the account and governs every order that follows. I review the application, the terms and the guarantee from the customer's side and return them marked up with a written explanation of what they commit the business and its director to and the terms worth asking to change, for a fixed fee of £495 in three working days.

Who this is for

Businesses in England and Wales opening a credit account with a builders' merchant, a wholesaler, a distributor, a fuel supplier or a manufacturer, and the directors who are asked to guarantee the account personally. The customer and the supplier are businesses; the guarantee is given by an individual.

What to look for in a trade credit account application

The terms you are accepting for every order

The application incorporates the supplier's terms of business into every future order, and the terms will exclude the implied terms as to quality and fitness in section 14 of the Sale of Goods Act 1979, limit the supplier's liability, and provide that the supplier's terms prevail over the customer's purchase orders. Against a business customer those exclusions are valid only if reasonable under section 6 of the Unfair Contract Terms Act 1977 and section 3. The review reads the terms as the contract for the next ten years of orders, checks the warranty, the returns and the delivery provisions, and asks for the terms to be fixed at the version attached rather than the version on the supplier's website from time to time.

Retention of title, all-monies clauses and the goods you have used

The terms will reserve title to the goods until the customer has paid for them and, under an all-monies clause, until the customer has paid everything it owes the supplier on any account, with a right for the supplier to enter the customer's premises and take the goods back. Retention of title is recognised by section 19 of the Sale of Goods Act 1979, but it gives the supplier nothing once the goods have been incorporated into other goods or built into land. The review checks the scope of the clause, the supplier's entry and repossession rights, and the obligation to store and insure the goods separately, which a customer using materials on site cannot meet.

Interest, charges, set-off and the credit limit

The terms will charge interest on overdue sums at a contractual rate, add collection and administration charges, exclude the customer's right to set off claims for defective goods against invoices, and allow the supplier to withdraw or reduce the credit limit and demand immediate payment of the whole balance. The review checks the interest rate against the statutory rate under the Late Payment of Commercial Debts (Interest) Act 1998, which the contractual term displaces only if it is a substantial remedy, asks for set-off to be preserved for admitted claims, and for the credit limit to be withdrawn only on notice and for stated reasons rather than at the supplier's discretion.

The credit search, the data and the references

The application authorises the supplier to search the credit files of the business and of the directors personally, to share payment performance with credit reference agencies, and to take references from the customer's bank and other suppliers. The review checks the scope of the authority, which should be limited to the assessment and management of the account, and the privacy information the supplier gives, since the directors' details are personal data under the UK GDPR and the Data Protection Act 2018 and the search leaves a footprint on their files.

The director's guarantee: what it covers and how it ends

The guarantee on the form makes the director personally liable for everything the company owes the supplier, now and in the future, on any account, without a cap, until the supplier releases it, and it is enforceable if it is in writing and signed under section 4 of the Statute of Frauds 1677. The review asks for a cap, for the guarantee to be limited to this account, for a right to terminate it by notice for future liabilities, for the supplier to notify the guarantor before the credit limit is increased, and for the guarantee to fall away when the director leaves the company. Where a spouse or a co-director is asked to sign without an interest in the account, the supplier should ensure they have independent advice, following Royal Bank of Scotland plc v Etridge (No 2) [2001] UKHL 44, or risk the guarantee being set aside.

What it costs

Standard review, £495. Marked-up document and a written explanation of the changes. Three working days.

Buying online forms the engagement on payment. The scope is what the contract review page describes, you accept the Terms of Service at checkout, and I email you within four working hours to get started. If you would rather ask something first, email me.

What you get

• Your own contract returned with my amendments as tracked changes, plus a clean version with every change accepted, ready to send to the other side
• Comments in the document where a point needs explaining
• A written explanation of what I have changed and why, by email or as an attachment if it is lengthy, marking the points I would hold firm on and the ones that are negotiable
• A view on what is normal market practice and what is the other side pushing their luck
• One round of follow-up questions by email, included

What is not included

• Negotiating directly with the other side, which I quote separately once I know who is on the other side. Where the other side is willing to share a live document, I can work in that document directly
• Drafting a replacement contract from scratch
• Advice on the law of any jurisdiction other than England and Wales
• Tax, accounting or regulatory advice
• Disputes about a contract that is already signed

Questions I am often asked

I signed the credit application five years ago. Am I still guaranteeing the account?

If the guarantee was a continuing one, which supplier forms make it, then yes, for everything the company owes and until the supplier releases you. The review reads the guarantee and sets out how to bring it to an end for future liabilities and what you remain liable for.

The supplier says its terms override our purchase order. Which applies?

That depends on whose terms were the last put forward and accepted, and the credit application usually provides that the supplier's terms prevail. The review checks the incorporation clause and, if the terms are unacceptable, what to send with each order to displace them.

Can the supplier come and take back materials we have already used?

Not once they have been built into a building or made into something else; retention of title then gives the supplier nothing but a claim for the price. The review checks the clause and the entry rights and asks for them to be limited to identifiable goods still in your possession.

Related guidance and services

• Contract review, £495, the service this page describes
• Terms and conditions drafting, £995
• Reviewing a personal guarantee before you sign it
• Reviewing a wholesaler's terms of business before opening an account

This page is general guidance for businesses in England and Wales, not advice on your own circumstances. Last reviewed: September 2026. Email geoffrey@caesar.co.uk.