*Use Canadian CONTRACT LAW to answer this question please.
Lois is a young businesswoman who has recently graduated from a College. She decided to start a business which organizes online conferences for administrative professionals, seeing an opportunity in the market. Lois approaches Lex Luther Lending Corporation ("Lex") about a loan to obtain capital to start her business. Lex is impressed by her business plan, but given her inexperience and lack of collateral, is only willing to lend Lois the $50,000 she needs if the loan is guaranteed.
One evening Lois and a representative from Lex go to visit Lois'
mother, Lana, at the retirement home. Lana is seventy years old and
has been in the retirement home for six years after a car accident
in which her husband was killed. As a result of the accident, Lana
suffered a serious brain injury and has lost many memories of her
life and suffers from language comprehension difficulties. Lana is
now very passive as she was heavily reliant on her husband for
emotional and financial support. She is now very dependent on Lois
for emotional support. Lois shows her mother the loan contract from
Lex and tells her: "the loan company just wants to make sure that
everything will be okay with my new business. They just want to
make sure that someone will pay them if it goes broke, but I'm sure
that won't happen. Please sign here"
QUESTION: Is Lana liable under the guarantee? Explain why or why
not.
Answer 1) In the above case Lana is not liable as a guarantor because the guarantor whosoever is taking the guarantee of any person must of sound mind, which means with functional mental thinking and health and should be able to understand their role and responsibilities before signing the agreement of guarantor. In this case Lana is not fit that she can take responsibility of Lois, as told in the case Lana suffered a serious brain injury and has lost many memories of her life and suffers from language comprehension difficulties. So keeping all these things in mind Lana liable under the guarantee
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