Guaranteeing Someone Else's Debts
University of Sydney - Faculty of Law
University of New South Wales (UNSW) - Faculty of Law
affiliation not provided to SSRN
July, 23 2008
Journal of Banking and Finance - Law and Practice, Vol. 12, pp. 181-198, 2001
Sydney Law School Research Paper No. 08/71
Despite increasing awareness of the hazards of doing so, people still continue to guarantee loans for other people (usually relatives or partners) and by doing so, may end up suffering from "sexually transmitted" or "relationship" debt. When a guarantee is enforced, there can be serious consequences such as the loss of the guarantor's home. In this discussion, we outline a project undertaken by the NSW Law Reform Commission who did a project that included a major empirical component on third party guarantees. We note that guarantees for small business loans tend to cause the greatest hardship since business loans (and third party security for them) are not as tightly regulated as are consumer borrowings.
Number of Pages in PDF File: 19
Keywords: law reform, small business loans, third party guarantees, emotional pressure, guarantees, review of unfair contracts, sexually transmitted debt, relationship debt
JEL Classification: K10, K30
Date posted: July 23, 2008
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