Monday, March 31, 2008

Third Party Guarantee

A law firm entered into an agreement with a third party to guarantee payment of a client's legal bills. The firm agreed to release the client from further liability in exchange for a $5,000 payment. The firm then sued on the guarantee. The New York Appellate Division for the Second Judicial Department reversed the trial court's grant of summary judgment for the third party: "[T]he plaintiff's reservation of rights clause contained in the stipulation [with the client] did not absolve the defendant of his obligation under the guarantee...there are triable issues of fact concerning the reasonable value of services rendered by the plaintiff to [the client]." (Mike Frisch)

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