Journal of Banking and Finance - Law and Practice, Vol. 12, pp. 181-198, 2001
19 Pages Posted: 23 Jul 2008
Date Written: July, 23 2008
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.
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
Suggested Citation: Suggested Citation
Graycar, Reg and Lovric, Jenny and Johannson, Robyn, Guaranteeing Someone Else's Debts (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. Available at SSRN: https://ssrn.com/abstract=1170502