Irene conducts a fish wholesaling business. Her primary market is restaurants in Melbourne’s CBD. The business had prospered for some years, earning approximately $1,000,000 in annual profits, but deteriorated when Irene began spending many business hours at the casino. Irene had also lost a considerable amount of money gambling: $10,000,000. She approached her bank, Second National. They refused to grant her any more credit unless the following occurred:

1. Irene obtained a personal guarantee from her sister Effie- who had approximately $15,000,000 in her bank account, also with Second National.
2. The loan plus interest must be repaid within 5 years. If not, then Second National would take ownership and control of the business completely.

Advise Irene.

1. Second National’s request above will breach the Code of Banking Practice.
2. Second National’s request above would be unconscionable.
3. Second National’s request above complies with the Code of Banking Practice and is not unconscionable.
4. None of these answers are correct.