Elizabeth gave a guarantee to the bank in support of a loan to Tomasz.Over the next few years,the bank and Tomasz made a number of alterations to the loan agreement.The effect of these changes was to significantly increase the amount owing to the bank.Elizabeth had no notice or knowledge of these changes,nor did she consent to any such changes.What is the likely result?

Question

Quizplus · Accepted Answer

A guarantee is a contract between the guarantor and the creditor, and like any other contract, changes made to the terms without the consent of the guarantor are not binding on the guarantor. Elizabeth did not consent to the changes made to the loan agreement, and she had no knowledge of them; therefore, she cannot be bound by them. So, Elizabeth will not be bound by the new terms and will be released from her obligations under the guarantee.

Elizabeth Gave a Guarantee to the Bank in Support of a Loan