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Co-signing, Guarantees and Joint Debts (view source)
Revision as of 22:27, 16 September 2018
, 22:27, 16 September 2018no edit summary
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=== Defences for guarantors and joint debtors=== | === Defences for guarantors and joint debtors=== | ||
In some instances, a guarantor or joint debtor may be able to argue that common-law defences, such as unconscionability (explained in the section on Contract Defences), should apply to their circumstances. In ''Bank of Montreal v. Koszil'', the court found that a guarantor (a common-law wife) who had not received independent legal advice, and who was not fully aware of her common-law partner’s financial predicament before signing a promissory note (an enforceable promise to repay a debt or loan) and mortgage, was the victim of unconscionability. The action against her was dismissed. In ''Toronto-Dominion Bank v. Wong and Lim'', however, the court found that a mother, as joint debtor, was responsible for her son’s debt even though it was clear that the benefit of the loan went to the son, and that the mother had not received independent legal advice. The court found that agreeing to sign the loan showed imprudence, but not unconscionability. | In some instances, a guarantor or joint debtor may be able to argue that common-law defences, such as unconscionability (explained in the section on [[Contract Defences]]), should apply to their circumstances. In ''Bank of Montreal v. Koszil'', the court found that a guarantor (a common-law wife) who had not received independent legal advice, and who was not fully aware of her common-law partner’s financial predicament before signing a promissory note (an enforceable promise to repay a debt or loan) and mortgage, was the victim of unconscionability. The action against her was dismissed. In ''Toronto-Dominion Bank v. Wong and Lim'', however, the court found that a mother, as joint debtor, was responsible for her son’s debt even though it was clear that the benefit of the loan went to the son, and that the mother had not received independent legal advice. The court found that agreeing to sign the loan showed imprudence, but not unconscionability. | ||
A common client concern about becoming a guarantor is the apparent unfairness of being responsible for someone else’s debt when little or no benefit has gone to the client. The client may complain, “My friend got all the money.” Unfortunately, this does not often translate into a defence or remedy for the client. | A common client concern about becoming a guarantor is the apparent unfairness of being responsible for someone else’s debt when little or no benefit has gone to the client. The client may complain, “My friend got all the money.” Unfortunately, this does not often translate into a defence or remedy for the client. | ||