A branch manager of WR has received a request from a corporate customer, Acme Pty Ltd,...

 

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A branch manager of WR has received a request from a corporate customer, Acme Pty Ltd, which wishes to increase its overdraft. The bank is prepared to do so provided the company provides appropriate security in view of the fact that the current overdraft has exceeded its limit. Acme's directors, John and Wisteria, suggest that Wisteria's parents might be prepared to mortgage their home to the bank. Required: The manager seeks your legal advice about the pitfalls of accepting security from such people, and what precautions the bank would need to take if it decided to do so. ( See Amadio's case). A branch manager of WR has received a request from a corporate customer, Acme Pty Ltd, which wishes to increase its overdraft. The bank is prepared to do so provided the company provides appropriate security in view of the fact that the current overdraft has exceeded its limit. Acme's directors, John and Wisteria, suggest that Wisteria's parents might be prepared to mortgage their home to the bank. Required: The manager seeks your legal advice about the pitfalls of accepting security from such people, and what precautions the bank would need to take if it decided to do so. ( See Amadio's case).

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The pitfalls that exist for accepting such kind of security from such relatives of the top managemen... View the full answer