Ram has worked as a successful accountant for several years since graduating with the Master of Professional Accounting from Charles Darwin University. He is 32 years old and is looking to start his own accounting practice in Parap, Northern Territory. He has saved up a substantial amount of capita. However, he will still need to borrow $25,000 to finalise the arrangements. He has no assets and cannot obtain a loan without a guarantor. Ram consults his elderly parents, who grew up in Australia. He tells them he has a fantastic idea and that he needs their help. Ram's parents have always been very proud of him and think his plans are fantastic. Ram tells his parents he need only $25000 and this will be repaid within 6 months, after which time they would be under no futher liability. Arrangements are made for a bank manager to visit Ram's parents and theyboth sign as a guarantor for Ram. However, the agreement they sign is one for an infinite credit limit over an unlimited period.

Ram's parents do not have $2500 readily available to repay the loan and they fear to lose their family home. They seek your advice. In your answer, consider the case of Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447.