The Law Handbook 2024

434 Section 5: Managing your money • the credit provider alters the guaranteed contract (e.g. by giving the debtor more time to pay than the original contract provides for), as long as this alteration is by a binding contract. However, the terms of the guarantee may make the guarantor liable even if one of the matters listed above has occurred. The National Credit Code and guarantees Formalities of guarantees The NCC creates additional requirements for guarantees that are related to credit contracts that are regulated by the NCC. These requirements are: • a guarantee must be in writing and must be signed by the guarantor; although, it is enough if the guarantee is contained in a mortgage signed by the guarantor (s 55(2) NCC); • a guarantee must contain a Form 8 warning (s 55(3) NCC; reg 81, Form 8, sch 1 National Consumer Credit Protection Regulations 2010 (Cth) (‘ NCCP Regulations ’); the guarantee is not enforceable unless these requirements are complied with (s 55(3) NCC); • a copy of the credit contract must be given to a guarantor before they sign (s 56(1)(a) NCC); the guarantee is not enforceable unless this is done (s 56(2) NCC); • a credit provider must give a prospective guarantor a copy of a document entitled, ‘Form 9 information statement: Things you should know about guarantees’, which explains guarantors’ rights and obligations (s 56(1)(b); reg 82, Form 9, sch 1 NCCP Regulations); • a credit provider must, within 14 days after a guarantee is signed, give the guarantor a copy of the guarantee signed by the guarantor and any related credit contract or proposed credit contract (if a copy of the related contract has not previously been given to the guarantor) (s 57 NCC). Can a guarantee be cancelled? A guarantor can withdraw from a guarantee by giving written notice to the credit provider: • at any time before credit is first provided under the credit contract (s 58(1)(a) NCC); or • after credit is first provided under the credit con­ tract, if the contract is materially different from the proposed credit contract given to the guarantor before they signed the guarantee (s 58(1)(b) NCC). A guarantee can also be cancelled by a court under section 76 of the NCC if it is found to be unjust (see ‘Unjust contracts’, below). In the cases of Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 and Garcia v National Australia Bank Ltd (1998) 194 CLR 395, the High Court held that it would be unconscionable to allow the respective banks in those cases to enforce the guarantees against the guarantors due to defective sign-up processes. All-accounts guarantees A guarantee may provide that the guarantor guarantees not only the debtor’s obligations under a particular credit contract but also obligations under future credit contracts (s 59(1) NCC). The guarantee will only be enforceable in relation to future credit contracts if the credit provider has given the guarantor a copy of the contract document of that future credit contract and subsequently obtained from the guarantor a written acceptance of the extension of the guarantee (s 59(2) NCC). Increasing a guarantor’s liabilities A guarantor’s obligations under a guarantee can be significantly increased in a variety of ways (s 61 NCC). For instance, the credit contract subject to the guarantee may allow the debtor and credit provider to agree to vary the contract by providing further amounts of credit under that contract to the debtor. However, increased liability has no effect unless: • the credit provider gives the guarantor a written notice setting out how the terms of the credit contract can be changed to allow an increase in the guarantor’s liabilities; and • the credit provider obtains from the guarantor an acceptance of the extension of the guarantee to that increased liability (s 61(2) NCC). Certain exceptions to these requirements are set out in section 61(2) of the NCC. ANZ v Manasseh [2016] WASCA 41 In the case of ANZ v Manasseh [2016] WASCA 41, the court had to decide if a second letter of offer to