At the time of Peter's car loan application Cal verbally agreed to be a guarantor. The creditor insists that Cal sign the guarantee document before it advances the money for the car. Cal doesn't understand the fuss, but signs the document. After a few months of the loan being in place, Cal receives a notice from the bank that Peter missed a payment, and that Cal is to pay.After writing a cheque, Cal confronts Peter who said he could not afford it this month because he bought a new stereo. Cal is annoyed with Peter's irresponsible actions and informs Peter that next month he will have to pay two installments, one to the bank and one to him to make up for this month. Peter informs Cal he does not have the right to demand payment from him as he is not the creditor and furthermore Peter never entered into a contract with Cal.

What is the main legal issue? Was Cal liable to pay under the guarantee in the first place? If so, can he legally demand to be repaid the monthly instalment he made on Peter's behalf?

Make sure to follow the prescribed format:

• Identify the main legal issue(s)
• Answer any questions that are being asked
• Support your answer by a discussion of related legal concepts