Business Law - Case: Contract Law

Facts of the Case:

Bob is a recognized French horn player. Bob has played for several major symphonies. Last year Bob went through bankruptcy and in order to pay his rent for a couple of months took out loans from a small bank - Avarice Bank - and pledged his french horn as collateral. He was unable to make the first payment on the loan so the bank was getting ready to take the french horn for non-payment. Bob approached the director of the Gilroy Philarmonic International Symphony - Joe - for help - asking him to guarantee payment so he does not lose his french horn. Joe agreed to guarantee the payment - partially because Bob is scheduled as the featured performer at the Classic Polka Festival in Gilroy which Joe manages. Joe called Avarice Bank and said if Bob could not pay, he would, and Avarice accepted his guaranty by phone. Bob played for the Polka Festival (it was very successful), but immediately after, left town and his whereabouts are unknown. Avarice has contacted Joe and indicated they have not collected from Bob and they expect Joe to pay the debt. Joe told Avarice they did not have anything in writing from him (though there are witnesses who heard Joe guarantee payment) and he believes he will not be liable for Bob's debt. Avarice has indicated it will file suit for payment against Joe.

Instructions: Please provide your answers to the following questions:

Issue: What is the legal issue/dispute? (Be specific. Don’t just say Contract Law)

Decision: Who should prevail?

Support: Provide support for your decision. Describe what the law says about situations like this, and how it applies to this case.