Source: Warhammer Fantasy: 7th Edition

Fear/Terror (Characters)
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Sometimes an enemy unit of ordinary troops is led by a mighty character that causes Fear or Terror. Such units gain the same immunities as the character for as long as he is with them.

In the same way, if a character is liable to a Terror or Fear test that doesn't apply to the rest of the unit, he can ignore any tests. For example, if a character that is subject to Fear is in a unit of Fear-causing troops, such as Ogres, and is charged by enemies who cause Fear, he does not have to take a Fear test.

If an enemy wishes to charge a unit containing a Fear/Terror causing character, test for Fear/Terror only if a charge will result in the unit fighting the character in question.

In the case of Terror, a unit must also test if it is within 6" of a Terrifying character at the start of its turn, but not necessarily because it is within 6" of a unit that the Terrifying character is in. If the unit is charging a unit of enemy troops in the side or rear, so that the charging unit won't have to fight a Terror- causing model, then the unit does not have to test for Terror. This is common sense - if you don't have to confront the character, then no test is required.

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