Eric was a 62 year old school teacher, who had been employed all of his life in a remote high school in western New South Wales. He had limited social skills, but had worked hard all of his life and had saved a considerable amount of money upon which he planned to retire in a few years time. He owned several houses in the small town in which he lived.

Eric had not had much success in meeting women, primarily because of the isolation associated with his employment. So in February 2020 he decided to join findamate.com, an online internet dating agency.

He immediately noticed the profile of Sloane. The two met and a romance blossomed.

Sloane had presented herself as a very successful business woman. But the truth was that she was near bankruptcy. She had significant financial debts and her company was near the point of financial collapse.

Sloane was aware of the financial position of Eric. She suggested a scheme whereby, in exchange for monthly payments of $5,000 and a 25% share of the profits, Eric would permit his properties (worth $800,000) to be mortgaged to a bank. Sloane's company would then borrow further funds and using all the borrowings it would develop a new business which would be involved with the provision of educational services. Sloane had assured Eric this new venture was sure to be exceptionally profitable in the very near future. Eric was to become a director of the company and would also be employed as a consultant for the new venture.

The reality was that Sloane intended to use the funds to launch a new business venture, to reduce her personal indebtedness and to pay the debts of her existing company.

Eric gave Sloane the title deeds to his properties. Soon after Sloane brought a large bundle of documents to Eric's home for his signature. Eric began to read the documents. Sloane was offended and became angry and slammed her hand on the documents preventing Eric from reading further. Sloane threatened to end their relationship because of a lack of trust. Sloane said that if Eric really loved her he would sign the documents immediately. Eric felt very distressed and physically threatened by her conduct. He did not want to jeopardise the relationship. He did not read the rest of the documents, but simply signed them.

Unknown to Eric, the documents included a personal guarantee which meant that Eric would be liable to pay the bank if Sloane or her company were unable to repay their debts.

As a result of Sloane having the title deeds to Eric's property and his signed guarantee, her company was able to obtain a loan of $1.3 million from the bank. Sloane used this money to substantially reduce her personal debts and the debts of her existing company. None of the funds were used to fund the development of a new business or the new business opportunities which Sloane had indicated.

Ari, the bank's branch manager, was aware that Eric did not have a solicitor advising him. He was given a copy of the minutes of the company directors' meeting and he could see from this that Eric understood the loan to be for the purpose of developing new opportunities in the field of education.

Soon after Sloane announced to Eric that she was ending the relationship because she had found someone else. Eric is deeply distressed. He seeks advice as to any course of action he may have against Sloane and the bank under the law of contract. Confine your answer to relevant common law and equity law issues only.