Joe obtains a loan from a bank,and his wife,Mary,gives a personal guarantee as security.The guarantee is expressed as being a continuing guarantee.Two months later,Joe also obtains a line of credit from the same bank.This time Mary does not sign a guarantee.Mary is happy because she believes that the bank will not come after her if Joe defaults on the line of credit.Is Mary's belief true or false?

Question

Quizplus · Accepted Answer

Mary's belief is false. The continuing guarantee she gave for the initial loan means that the bank can still come after her if Joe defaults on any subsequent loans or lines of credit obtained from the same bank.

Joe Obtains a Loan from a Bank,and His Wife,Mary,gives a Personal