Sally Borrowed $50 000 from Halifax Bank to Renovate Her

Sally borrowed $50 000 from Halifax Bank to renovate her basement. The loan was to be repaid in monthly instalments over five years. The interest rate was 5 percent. Sally's mother, Elise, guaranteed the loan. Elise was provided with independent legal advice before she signed the guarantee. After two years, Sally sought to increase the amount of the loan. After a few meetings, Sally and the Bank agreed to increase the loan to $75 000 and to increase the interest rate to 7 percent. Which of the following statements regarding Elise's legal position is TRUE?

A) Elise is not bound by her guarantee because Sally is not in default on the principal obligation.
B) Elise is only bound by the guarantee up to the amount of Sally's original liability under the loan because she did not consent to the increase in the interest rate or the increase in the amount of the loan.
C) Elise is still bound by her guarantee because the increase in the interest rate and the extension of the term are not significant changes.
D) Elise is still bound by her guarantee notwithstanding the changes to the principal obligation.
E) None of the above.