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Guarantees and Indemnities

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Nick Dowse Guarantees and Indemnities – Structure of Answer Textbook: 382, Q & A: 59, Study Guide: 73 Structure of Answer 1. State general rule. Section 56 of the Property Law Act 1974 (Qld) provides that contracts of guarantee are unenforceable unless they are in writing and signed by the party to be charged. a. Guarantor’s liability is secondary (Yeoman Credit v Latter) b. The head contract must be enforceable or the contract with the guarantor will also be unenforceable (Yeoman) 2. “However, if the contract is an indemnity rather than a guarantee, the liability is primary and is enforceable, that is, it is not required to be evidenced in writing, even if the head contract is invalid. (Lakeman v Mountstephen)” 3. May also be distinguishable as: a. Promises of guarantee made by the guarantor to the debtor that the guarantor would pay the debt of the debtor (Eastwood v Kenyon) b. Situation where one agrees to take over the debt of another (Gray v Pearson) c. When no personal liability is imposed (Harvey v Edwards) d. Letters of comfort (Banque Brussels v Australian Nationa
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