Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Tom owns his own business. Due to covid restrictions, his business is on the verge of bankruptcy. Hoping to extend his line of credit with

Tom owns his own business. Due to covid restrictions, his business is on the verge of bankruptcy. Hoping to extend his line of credit with the bank, Tom and his bank manager visited Tom's parents in the hope of asking them to be a guarantor if Tom borrowed another $550,000 from the bank. During the meeting with his parents, the bank manager heard Tom, telling his parents that they "would only be offering security for another $15,000" - which the bank manager knew was untrue. Because Tom's parents were unable to read the paperwork they were signing, and because they trusted their son, Tom and the bank manager watched quietly while his parents signed over their family home as security for Tom's business loan. Two weeks later, his parents are shocked to learn that Tom has become bankrupt and that the bank is forcing the sale of their family home to pay Tom's debts totalling nearly $1m.

Required:

Advice Tom's parents whether they have to go through with the sale of their house. You must refer to case law and address the relevant elements.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Criminal Law Directions

Authors: Nicola Monaghan

7th Edition

0192855379, 978-0192855374

More Books

Students also viewed these Law questions