Khalil wants to open a business under the name of Project Excellence Management and Solutions...
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Accounting
Khalil wants to open a business under the name of Project Excellence Management and Solutions (the management company). In order to obtain a loan from his local bank Khalil needed a guarantor. He went to his friend Jennifer, a business professor, to ask her for help. She agreed to co-sign the loan for $250,000. Jennifer would occasionally check in with Khalil to see how the management company was doing and offer him advice as this was his first venture into the world of management. 3 months after the initial loan, having had success in his business, Khalil signed an additional loan with the bank for $500,000. He did not tell Jennifer. Due to an economic downturn 1 year later the management company was forced to shut down. The bank is now seeking to collect from both Khalil and Jennifer for the full remaining balance of $650,000. Jennifer comes to you for advice.
What is the scope of Jennifers liability?
Was there a partnership?
What defences might Jennifer rely upon?
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