New Zealand: the solicitor’s contractual duty of care in advising guarantors

Abstract

Outlines the duties of a solicitor who undertakes to advise a guarantor; solicitors have to do more than explain the guarantee terms and witness the signature, and they can and have been sued for inadequate advice. Describes a case study in New Zealand, Bindon v Bishop, where trustees of a deceased man’s estate sued both the solicitors of a borrower and the adviser of the deceased himself when the borrower defaulted on the loan. Criticises the outcome of the trial, which went to the Appeal Court and led to the judgment that the solicitor had given competent advice on legal risks and liabilities, so that the claim was dismissed. Contends that a solicitor should be obliged to comment on the wisdom of entering into a transaction.

Citation

Hemraj, M.B. (2004), "New Zealand: the solicitor’s contractual duty of care in advising guarantors", Journal of Financial Crime, Vol. 11 No. 4, pp. 353-355. https://doi.org/10.1108/13590790410809301