Your brother wants to borrow $8000 from the Bank of Britannia and has asked if you would guarantee the loan.You have been told the following with regard to guarantees.Which of the following statements is false?
A) As guarantor, you can use any defence against the bank that your brother could use.
B) A guarantor, like an indemnitor, becomes primarily liable on the debt as soon as the document is signed.
C) You, as guarantor, may be relieved of your obligation if the bank does anything to weaken your position-e.g., by agreeing with your brother to increase the amount without your consent.
D) If he defaulted on his payments and you had to pay the debt to the bank, you would be subrogated to the rights of the bank-i.e., you would get the bank's right to sue your brother.
E) A legally enforceable guarantee must satisfy all the elements required to create a binding contract.

Question

Quizplus · Accepted Answer

A guarantor becomes secondarily liable on the debt, meaning that they are only liable to pay if the borrower (in this case, the brother) defaults on their payments. The primary responsibility to pay the debt still rests with the borrower. Therefore, statement B is false.

Your Brother Wants to Borrow $8000 from the Bank of Britannia