Rosa signs a guarantee for her husband's company debts on the basis of his assurance. The bank did not check that she had independent advice. Under Royal Bank of Scotland v Etridge, what must the bank do to protect itself where it is put on inquiry?
Answer and explanation
Correct answer: B. Take reasonable steps to ensure she has had independent legal advice about the transaction
- Step 1: Etridge sets out the steps a lender must take when a wife stands surety for her husband's debts.
- Step 2: The bank should communicate directly with her and ask her to confirm the name of a solicitor who will advise her.
Answer
Take reasonable steps to ensure she has had independent legal advice about the transaction.
Why not the others: The husband's confirmation is not independent; valuations are irrelevant; attendance at a branch does not protect her.
Practise more Vitiating factors, discharge and remedies.
Free questions with an explanation for every one, and full timed SQE1 (Solicitors Qualifying Examination) mock tests.
More Vitiating factors, discharge and remedies questions
- A person signs a contract after being told that his family would be harmed unless he did so. Which doctrine applies?
- Two parties contract for the sale of a painting that, unknown to both, had been destroyed by fire before the contract. What is the effect un…
- The Frustrated Contracts Act 1943 applies after frustration. Which statement is correct?
- In Taylor v Caldwell, a music hall was destroyed by fire before the contract date. What is the legal effect?
- A seller informs a buyer a week before delivery that he will not deliver the goods at all. What may the buyer do?
- Applying Hadley v Baxendale, for which losses can a claimant recover in contract?