Question
Anna is one of two directors and shareholders of a company that buys and sells musical instruments. Vronsky is the other director and shareholder. Anna
Anna is one of two directors and shareholders of a company that buys and sells musical instruments. Vronsky is the other director and shareholder. Anna wants to borrow $100,000 for both the company and for private purposes from a bank. She borrows the money in her own name, but the bank wants a guarantee from the company. She knows Vronsky will refuse to do so, so she signs the guarantee 'Anna, director' and writes 'Vronsky, director' in writing that is dissimilar to her own.
Anna has also signed a contract on behalf of the company to purchase $500,000 worth of musical instruments from a new supplier who has approached her. Under the company's constitution, any purchase orders of greater than $200,000 must be referred to and approved by the board of directors. Anna did not refer this transaction to the board.
If Anna fails to meet payments under the loan agreement, can the bank enforce the guarantee against the company? Why? Explain your answer?
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