Guaranteeing Someone Else's Debts

Journal of Banking and Finance - Law and Practice, Vol. 12, pp. 181-198, 2001

Sydney Law School Research Paper No. 08/71

19 Pages Posted: 23 Jul 2008  

Reg Graycar

The University of Sydney Law School

Jenny Lovric

University of New South Wales (UNSW) - Faculty of Law

Robyn Johannson

affiliation not provided to SSRN

Date Written: July, 23 2008

Abstract

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

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

Reg Graycar (Contact Author)

The University of Sydney Law School ( email )

New Law Building, F10
The University of Sydney
Sydney, NSW 2006
Australia

Jenny Lovric

University of New South Wales (UNSW) - Faculty of Law ( email )

Kensington, New South Wales 2052
Australia

Robyn Johannson

affiliation not provided to SSRN

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