A borrower’s brother undertook to repay the money to the lenders, after he sells his house.
The Court accepted the claim against the brother due to his consent to serve as a guarantor for the repayment of the loan. A contract intended to create a guarantee for an existing debt is valid, even if made orally. A contract can be canceled due to coercion, including a financial one. However, it is necessary for the economic pressure to be inappropriate, involving moral, social or economic wrongdoing. Additionally, one must show that the obligating person had no practical or reasonable alternative not to succumb to that pressure. Here, the borrower’s brother had a personal acquaintance with the lenders and it was he who connected the lenders with his brother. The borrower's brother felt discomfort in view of the borrower's (his brother) entanglement in bankruptcy proceedings in the US and made a written commitment and even a verbal one that he would sell the house and repay the funds to the lenders out of the consideration he will receive. Unpleasantness or remorse caused by the lenders to the borrower's brother, given their personal acquaintance, are not invalid and do not constitute coercion or financial pressure. Therefore, once the borrower's brother sold his apartment, the time has come for the realization of his guarantee and he must repay the loan money to the lenders from the consideration he received out of the transaction.