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. Overall, the outcome depended on the correct classification of the agreements documented in the “amendment and reformulation”: the other member of the Tribunal found that there had indeed been an amendment that did not resolve the previous agreement and therefore did not require the agreement of the guarantor at first sight. 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. In the court of appeal of Western Australia in Australia and New Zealand Banking Group Limited v. Manasse (announced March 10, 2016), the legal nature and effect of an amendment and reformulation was the central issue. The case concerned a claim by the Bank under a guarantee granted at the time of the first facility. The result was a victory for the guarantor, who successfully argued that the guarantee granted at the beginning of the facility did not extend to the modified facility arrangements, which were subsequently “modified and adjusted”. 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`s case did not help the fact that it gave the guarantor a form of agreement that was refused and that it must therefore ensure that the agreement it needed as a condition of the amendment was indeed not necessary.
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