A Melbourne business owner came to our office last year after receiving a demand from her bank for $847,000. She'd signed a director guarantee three years earlier for a $200,000 equipment loan, which the company had repaid in full. What she hadn't realised was that the guarantee also covered the company's subsequent overdraft, merchant facility, and business credit card, all of which had ballooned during COVID. The 'all monies' clause in her original guarantee meant she was personally liable for debts she didn't even know existed when she signed.

This scenario plays out regularly. When you book guarantor legal advice in Victoria, one of the first things a solicitor will check is whether your guarantee contains an 'all monies' clause, and what that means for your total exposure.

How 'All Monies' Clauses Actually Work

Standard bank guarantee documents rarely limit your liability to the specific loan you're signing for. The typical wording covers "all monies which are now or may hereafter become owing" by the company to the lender. That single phrase can turn a $100,000 guarantee into unlimited liability.

The clause operates in several ways that catch directors off guard:

  • Future facilities: If the company takes out additional loans, credit cards, or overdrafts with the same bank later, your existing guarantee typically covers them automatically
  • Variations: If the company increases its credit limit or extends loan terms, you may be liable for the increased amount without signing anything new
  • Interest and costs: Your liability usually includes accrued interest, default interest (often 4-5% higher than the standard rate), and the bank's legal costs in enforcing the guarantee
  • Other guarantors defaulting: If there are multiple guarantors and one can't pay, your share may increase to cover their portion

The independent legal advice certificate cost is a fraction of what's at stake. For context, we've seen guarantees enforced for amounts ranging from $50,000 to over $2 million against directors who thought their exposure was capped.

What Banks Don't Explain (And Why)

Bank staff are generally prohibited from giving legal advice, so they'll tell you to see a solicitor. But they also have targets to meet and loans to settle. The explanation you receive at the branch often focuses on the immediate transaction rather than the long-term implications of the guarantee terms.

Common gaps in bank explanations include:

  • The guarantee survives even if you resign as a director
  • Selling your shares doesn't release you from the guarantee
  • The bank can pursue you without first trying to recover from the company
  • Your liability continues even after the original loan is repaid, if other facilities exist

A recent case in the Victorian Supreme Court involved a director who resigned in 2019 but remained liable for debts the company incurred in 2021 and 2022. The guarantee contained no sunset clause, and the bank had no obligation to release him just because he'd left the business.

Calculating Your True Exposure

Before signing any guarantee, you need to understand your maximum possible liability. This isn't always the loan amount on the document in front of you.

Questions to work through include:

  • Does the company have any existing facilities with this lender?
  • Is the company likely to need additional credit in future?
  • Are there other guarantors, and what happens if they can't pay?
  • What assets do you own that could be at risk?
  • Is your family home held jointly with a spouse who isn't a guarantor?

The answers shape how risky the guarantee is for you personally. A guarantee for a company with no other bank facilities is very different from one where the company already has multiple credit products with the same lender.

What Happens During Proper Legal Advice

When you book guarantor legal advice in Victoria, the process involves more than getting documents witnessed. Under the Solicitors Rules 2015, the solicitor must explain the nature and effect of the transaction, including your potential liability.

At our firm, this means:

  • Reviewing all the loan and guarantee documents before your appointment
  • Preparing written advice specific to your situation
  • Meeting face-to-face to explain the risks in plain English
  • Verifying your identity using proper VOI standards
  • Answering your questions before you sign anything
  • Issuing the formal certificate using the Law Institute of Victoria prescribed forms

The meeting typically takes 30-45 minutes. We ask questions about your understanding of the business, your relationship with other directors, and whether anyone has pressured you to sign. These questions aren't just procedural. They help identify situations where signing might not be in your best interests.

Can You Negotiate Better Terms?

Sometimes. Lenders have more flexibility than they initially suggest, particularly for strong borrowers or competitive refinancing situations. Possible modifications include:

  • Capping the guarantee at a specific dollar amount
  • Limiting the guarantee to specific facilities only
  • Including a sunset clause that releases you after a certain period
  • Requiring notice before the guarantee extends to new facilities

Whether these requests succeed depends on your bargaining position and the lender's policies. But you can't negotiate what you don't know exists. That's why getting advice before signing matters.

The Cost of Not Understanding

Directors often treat the solicitor certificate as a box-ticking exercise, something the broker said they need to get the loan across the line. The pressure to settle quickly, especially with SMSF property purchases or business acquisitions, makes it tempting to rush through.

But the independent legal advice certificate cost of $880 to $1,320 is genuinely small compared to the liability you're accepting. We've seen directors lose their homes, their superannuation, and their savings because they didn't understand what an 'all monies' clause meant when they signed.

If you're being asked to sign a director guarantee, particularly one with an 'all monies' clause, take the time to get proper advice. For the formal certificate required by lenders, you'll need to see a solicitor.

Our office is in Melbourne CBD, and we can usually see you within two business days, or same day if you need the certificate urgently. Call us or submit an enquiry to book an appointment. The conversation might change what you're willing to sign.