Legal Environment of Business 8th Edition by Henry Cheeseman

Exercise 5

Guaranty Contract Glenn A. Page (Glenn) had a long-term friendship with Jerry Sellers, an owner of Gulf Coast Motors. Glenn began borrowing money from Gulf Coast Motors on a recurring basis during a two-year period. The loan process was informal: Gulf Coast Motors set up a ledger account and recorded each loan made to Glenn, and Glenn would sign the ledger "I agree to pay Jerry Sellers as above." At various times, Glenn would make small payments toward his account, but he would thereafter borrow more money. At the times the loans were made, Glenn was not working and had no assets in his own name. There was no evidence as to what Glenn used the loan proceeds for, but evidence showed that he had a gambling problem.
Sellers testified that toward the end of the two-year period of making loans to Glenn, he telephoned Mary R. Page, Glenn's wife, and Mary orally guaranteed to repay Glenn's loans. Mary had significant assets of her own. Mary denied that she had promised to pay any of Glenn's debt, and she denied that Sellers had asked her to pay Glenn's debt. Gulf Coast Motors sued Glenn and Mary to recover payment for the unpaid loans. Is Mary's alleged oral promise to guarantee her husband's debts an enforceable guaranty contract? Page v. Gulf Coast Motors, 903 So.2d 148, Web 2004 Ala.Civ.App. Lexis 982 (Court of Civil Appeal of Alabama)