Some Flexible Proposals to Solve Problems of Illiterate Guarantors in Three-Party Bank-Lending Transactions in Malaysia

Abstract

The fact that the guarantee and its relevant documents are in English language may not be a problem in England. Even so, in England, the courts acknowledge the position of English-illiterate guarantors, who may be vulnerable to exploitation. This was stated in the recent House of Lords’ decision in National Westminster Bank Plc v. Amin (executrix of the estate of Muhammad Amin) and another1 and in particular, the statement made by Lord Scott of Foscote that: ‘The features of the case I have in mind are these: (i) The bank, it is alleged, knew that Mr. and Mrs. Amin could not speak English and knew of their cultural, ethnic minority background. The bank knew, therefore, that they might be specially vulnerable to exploitation in relation to transactions such as that which was being proposed.’ Hence, Malaysia should consider to adopt the approach of the House of Lords’ in National Westminster Bank Plc v. Amin (executrix of the estate of Mohammed Amin and Another2. The present writer also place emphasis on the banking procedure in Malaysia. As will be seen later, banking institutions are strongly recommended to prepare guarantee documents in both English and the National Language to ensure English-illiterate guarantors fully understand the nature of the guarantee. Such a proposal is in line with the rules of courts in Malaysia.