In a Number of Cases, Problems Have Arisen Where a Wife

question 7

Multiple Choice

In a number of cases, problems have arisen where a wife guarantees the debts of her husband or his company to a bank but, on his default and the bank's request to enforce the guarantee, the wife alleges she was induced to guarantee by the husband's undue influence, misrepresentation, or pressure. To avoid rescission of the guarantee in the usual case, what are the minimum reasonable steps a bank must take to ensure the wife entered the transaction freely and knowledgeably?

• A) The bank must inform the wife itself of the nature of the transaction and the consequences of the guarantee, and obtain from her a confirmation that she entered into it of her own free will.
• B) The bank must order its solicitors to inform the wife of the nature and financial consequences of the transaction and obtain confirmation from her that she entered the guarantee of her own free will.
• C) The bank must communicate directly with the wife about the identity of her solicitor, disclose the necessary financial information to the solicitor and obtain a confirmation from the solicitor that the wife understands the nature and consequences of the transaction.
• D) The bank must demand from the husband that he duly informs his wife about the nature and financial consequences of the transaction and obtain from him a confirmation that she has been advised about the nature and consequences of the transaction.

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Definitions:

Competitive Firms

Businesses that operate in markets where there are many buyers and sellers, and no single entity can control the price.

Sherman Act

A foundational antitrust law in the United States aimed at prohibiting monopolies and fostering competition among businesses.

Interstate Commerce Act

A regulatory law enacted in the United States in 1887 to address unfair practices in the railroad industry and to regulate interstate commerce.

Federal Trade Commission Act

The federal law of 1914 that established the Federal Trade Commission.