Part A 1. Define a guarantee and identify the key parties. 2. Identify the requirements of a guarantee. 3. Explain the protection afforded by law to the guarantors (guarantor's rights) with reference to relevant case law. 4. 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). Part B True or False? ( with an explanation and/or reference to justify your answer) 1. A guarantee imposes primary liability on the guarantor. 2. The right of subrogation confers rights on the guarantor against the debtor. 3. The right of contribution is exercised by a guarantor against a co-guarantor in certain circumstances. 4. A guarantee may be avoided because of unconscionable conduct by a bank towards the guarantor 5. A fixed or specific guarantee is usually given in relation to overdrafts. Part C GLOSSARY Define the following terms