JUSTICE KUEHN delivered the opinion of the court:

Mildred E. Emrick appeals from the trial court's April 14, 1999, and June 14, 2000,orders relative to the defendants' summary judgment motion. We reverse and remand.

This suit stems from a dispute involving the manner in which the First National Bankof Jonesboro applied the proceeds from a sale of collateral. On August 20, 1992, JeffEmrick, who owned and operated a trucking company known as Emrick Trucking, Inc.,borrowed $421,252 from the First National Bank of Jonesboro (the Bank) for purposes ofdebt consolidation. Jeff Emrick is the son of Mildred E. Emrick. The August 20, 1992, loanwas secured by a security agreement, bearing the same date, between Jeff Emrick, doingbusiness as Emrick Trucking, Inc. (Emrick Trucking), and the Bank. That securityagreement gave the Bank a security interest in several trucks, trailers, and other equipmentin the event of a default on the loan. However, the Bank felt that it needed furtherguaranties in order to make this loan, and it required Mildred to personally guaranty theAugust 20, 1992, loan up to $150,000. On that same date, Mildred signed a guarantydocument to which only she and the Bank were parties. That guaranty was secured by amortgage on her home.

On January 3, 1994, Emrick Trucking borrowed an additional $30,000 from the Bankto pay bills and expenses. This loan was not specifically secured. Mildred was not a partyto this loan, and she did not specifically guaranty its repayment. The original securityagreement between Emrick Trucking and the Bank contained language that could beconstrued as including this second loan. The security interest Emrick Trucking gave thebank applied to the original loan and to "all other additional indebtedness or liabilities forwhich [Emrick Trucking] is now or may become liable to [the Bank]." Mildred's guarantycontained no such similar language.

Sometime during that first quarter of 1994, Emrick Trucking defaulted on both loans. Apparently without the Bank's consent, Emrick Trucking sold most of the trucks, trailers,and other equipment pledged as collateral on the first loan, raising $343,252. Proceeds fromthese sales were given to the Bank. The Bank applied these proceeds first to pay off theunsecured $30,000 note and then to reduce the outstanding balance owed on the first note. After taking these steps, $108,000 remained due on the original loan.

Since there was still a deficiency on the original loan, the Bank instituted a mortgageforeclosure action against Mildred. It appears that Mildred sold a portion of her real estatefor $108,917.32, but the record and briefs do not clarify if she sold it pursuant to theforeclosure or otherwise. In any event, the Bank applied those proceeds to the principalbalance still due on the original note. The Bank dismissed the foreclosure suit for reasonsthat cannot for certain be determined from the record, although it appears that the Bankdismissed the suit when Mildred offered the Bank an amount equaling the balance owed onthe first loan.

Mildred sued the Bank for breach of the guaranty document she had signed. Specifically, Mildred objected to the Bank's application of the proceeds of the sale ofcollateral to the unsecured note before the application of any amount to the loan to whichher guaranty was connected. Mildred contended that the Bank's giving priority to theunsecured loan increased her risk under the guaranty. The Bank filed a motion for summaryjudgment claiming that the first loan and security agreement, to which Mildred was not aparty, gave it the right to apply the proceeds from the sale of collateral to the subsequentloan. The Bank also contended that the issues Mildred raised in her suit were compromisedby way of an accord and satisfaction, in that Mildred offered the $108,917.32 in fullsatisfaction of her $150,000 guaranty and the Bank accepted her offer.

During the pendency of this case, Mildred amended her complaint to add ScottWilkins, the Bank's president, as an additional defendant. She essentially made the sameallegations against Scott Wilkins as she had made against the Bank. As the bank president,he was the one allegedly responsible for making the priority determinations when the moneyfrom the sale of collateral was presented to the Bank.⁽¹⁾

The motion for summary judgment was originally filed in late February 1998 and waslater withdrawn and refiled in June 1998. The motion was set for a hearing on September30, 1998, at which time the parties were given 30 days in which to file briefs. By docketentry we know that the trial judge reviewed the documentation filed by Mildred in mid-March 1999. On April 6, 1999, the trial judge filed his docket entry indicating his intent togrant the Bank's summary judgment motion. The order was signed by the trial judge andfiled on April 14, 1999. The order contained no basis for the decision. Mildred appealedthat decision to this court. On August 17, 1999, we dismissed the appeal because Mildredlacked jurisdiction pursuant to Supreme Court Rule 304(a) (155 Ill. 2d R. 304(a)), in thatthe order from which she appealed did not involve all of the parties and the summaryjudgment order did not indicate that there was no just reason for delaying either enforcementor appeal. Thereafter, on February 7, 2000, defendant Scott Wilkins filed his motion forsummary judgment on the same grounds as those included in the Bank's earlier-grantedmotion. The motion was set for hearing on June 7, 2000. The trial judge entered its ordergranting Scott Wilkins's summary judgment motion on June 14, 2000. As with the Bank'sorder, the trial judge included no reasons for his decision. Mildred appeals from both orders.

In determining the appropriateness of a summary judgment, the trial court strictlyconstrues all evidence in the record against the movant and liberally in favor of theopponent. Purtill v. Hess, 111 Ill. 2d 229, 240, 489 N.E.2d 867, 871 (1986). The courtmust consider all pleadings, depositions, admissions, and affidavits on file to decide if thereis any issue of material fact. Myers v. Health Specialists, S.C., 225 Ill. App. 3d 68, 72, 587N.E.2d 494, 497 (1992). On appeal, courts review summary judgment orders de novo. Myers, 225 Ill. App. 3d at 72, 587 N.E.2d at 497.

Simply stated, the Bank's position is that the original security agreement signed byEmrick Trucking allowed it to do whatever it wanted with the collateral proceeds in theevent of a default on the loan. The Bank believes that its position is accurate even withrespect to the subsequent loan and that it was specifically allowed to apply the proceeds towhichever loan it deemed appropriate, because of the all-inclusive language of the originalsecurity agreement. Mildred counters that she was never a party to the original securityagreement-only to the guaranty. Consequently, Mildred contends that she cannot be heldto the language contained within that security agreement. She argues that because the Bankpaid the balance of the second loan before it reduced the balance owed on the original loan,the amount of money for which she was potentially "on the hook" was increased.

Will the language of the security agreement allow the Bank to impair Mildred's rightsto a portion or all of the guaranteed amount in the remaining collateral proceeds? Wereverse the trial court's orders of summary judgment, hold that the Bank and Scott Wilkinscannot do what they did with the collateral proceeds, and remand this case to the trial courtfor further consideration.

Upon our review of the documents at issue, it would appear that if we did notconsider Mildred's guaranty and were only concerned with the relationship between EmrickTrucking and the Bank, then the Bank could do what it did. A clause contained within thesecurity agreement applicable to the first loan picks up any subsequent loans. Such a clauseis clearly allowed under the Uniform Commercial Code (Ill. Rev. Stat. 1991, ch. 26, par. 9-204(3) (now see 810 ILCS 5/9-204(2)(c) (West 2000))). Therefore, the Bank could legallyapply the proceeds from the sale of collateral to any loan it selected.

The problem with the application of this theory to this case is that Mildred was nevera party to the first or second loan documents, nor was she a party to the security agreement. By applying the proceeds to the second loan, the Bank increased Mildred's risk under theguaranty in the amount of $30,000.

In oral argument, the Bank acknowledged that its actions increased Mildred's risk by$30,000, but it argued that it was entitled to do so by a key provision contained within herguaranty. The Bank argues that paragraph four of her guaranty put Mildred on notice as topotential subsequent loans. The specific language at issue is as follows: "Indebtedness maybe created and continued in any amount, whether or not in excess of such principal amount,without affecting or impairing the liability of *** [Mildred] hereunder." The Bankacknowledges that this provision is subject to two separate interpretations. The Bank arguesthat the word "indebtedness" should really read "debt," thus allowing the Bank to makeadditional loans over and above the original amount loaned. The other interpretation is thatthe word "indebtedness" refers to the actual amount the Bank loaned initially and that as thedebt is paid down, additional amounts could be given to the borrower up to the amount ofthe original debt.

If there are any doubts relative to the language of a guaranty, those doubts must beresolved in favor of the guarantor. Lawndale Steel Co. v. Appel, 98 Ill. App. 3d 167, 173-74, 423 N.E.2d 957, 963 (1981) (quoting Telegraph Savings & Loan Ass'n v. GuarantyBank & Trust Co., 67 Ill. App. 3d 790, 794, 385 N.E.2d 97, 100 (1978)). Additionally, theguarantor's undertaking pursuant to the guaranty must be strictly construed, and his or herliability cannot be varied or extended beyond the precise terms of the guaranty. LawndaleSteel Co., 98 Ill. App. 3d at 174, 423 N.E.2d at 963 (quoting Telegraph Savings & LoanAss'n, 67 Ill. App. 3d at 794, 385 N.E.2d at 100).

In light of these basic tenets of contractual construction, we conclude that theguaranty Mildred signed did not extend to increase her obligation to include the second loanin the amount of $30,000.

The Bank also argues that pursuant to Mildred's guaranty, it had the right to take thefirst $150,000 upon her son's default. In other words, it argues that before collecting uponher guaranty, it did not need to wait to see how much money was obtained from the sale ofthe collateral. The Bank is correct about this assertion. However, the Bank further contendsthat it essentially did Mildred "a favor" by taking the collateral proceeds and then chargingher for the balance owed-$108,000. In essence, the Bank argues that it saved Mildred$42,000.

In making this argument, the Bank misses an extremely important point. By firstpaying itself back for the $30,000 loan and then applying the balance to the amount owedunder the first loan, $108,000 remained due pursuant to Mildred's guaranty. If the fullamount of the collateral proceeds, $343,252, was applied to the original loan amountwithout regard to the second loan, Mildred would only have been responsible for the$78,000 deficiency.

In response to this argument, the Bank reiterates its position that it could have merelytaken Mildred's $150,000 before it looked to the collateral. Furthermore, the Bank arguesthat Mildred has no legal or contractual rights to the excess collateral. If this was true, thenthe Bank would serve to profit mightily by not only taking $150,000 from Mildred but alsocollecting $343,252 from the sale of collateral. The Bank is clearly not entitled to receivemore than the amount of its loan. Consequently, the Bank's argument is flawed.

The Uniform Commercial Code provides guidance relative to this transaction. As theguarantor to a secured party (the Bank), Mildred would become subrogated to the Bank'srights and duties relative to collateral. Ill. Rev. Stat. 1991, ch. 26, par. 9-504(5) (now 810ILCS 5/9-504(5) (West 2000)). That section states, "A person who is liable to a securedparty under a guaranty *** and who *** is subrogated to his rights has thereafter the rightsand duties of the secured party." Ill. Rev. Stat. 1991, ch. 26, par. 9-504(5). Once thecollateral was sold and the proceeds were in the Bank's possession, Mildred becamesubrogated to the Bank's rights relative to the collateral. Simply stated, Mildred would beentitled to the excess, up to the amount that she was required to expend to make the Bankwhole, pursuant to her guaranty.

As Mildred did not guaranty the second loan in the amount of $30,000, she could notbe responsible for paying it back. The Bank's actions in first applying the collateral proceedsto the second loan increased Mildred's liability pursuant to her guaranty by the $30,000 andimpaired her rights against the collateral in that amount. Regardless of the contractual rightsthe Bank had against Emrick Trucking relative to the second loan, the Bank could not impairMildred's rights.

The Bank also argues that, pursuant to paragraph seven of Mildred's guaranty, shewaived any defenses she might have had. We disagree. Paragraph seven of the guarantybegins with a general waiver and then more specifically details her waiver of all possibledefenses that could be raised by Emrick Trucking or otherwise against the Bank relative tothe "indebtedness." Mildred's arguments are not centered upon the first loan but upon thefact that she did not guaranty the second loan and should not have had to pay the $30,000loan. These were not arguments about the legality of the original loan and her guarantythereof. At best, Mildred waived any defenses she had relative to the original indebtedness. Again, to the extent that the term "indebtedness" was subject to two meanings-the originalloan amount or the total of both loans, we construe that ambiguity against the Bank.

The Bank also argues that it reached an accord and satisfaction with Mildred whenshe paid the remaining deficiency on the original loan, $108,000.

An accord and satisfaction is basically an agreement between the parties that settlesa bona fide dispute over an unliquidated claim. A.F.P. Enterprises, Inc. v. Crescent Pork,Inc., 243 Ill. App. 3d 905, 911, 611 N.E.2d 619, 623 (1993). The three elements of anaccord and satisfaction are "(1) an honest dispute between the parties as to the amount dueat the time payment was tendered; (2) a tender of payment with the explicit understandingof both parties that it is in full payment of all demands; and (3) an acceptance by the creditorwith the understanding that the tender is accepted as full payment." A.F.P. Enterprises, Inc.,243 Ill. App. 3d at 911, 611 N.E.2d at 623. Additionally, as an accord and satisfaction isgrounded in contract law, there must be consideration and a meeting of the minds with theintent to compromise. A.F.P. Enterprises, Inc., 243 Ill. App. 3d at 911, 611 N.E.2d at 623. The "intent to compromise" can be inferred from the parties' words and actions. A.F.P.Enterprises, Inc., 243 Ill. App. 3d at 911, 611 N.E.2d at 623.

After reviewing the record, which included the depositions of both Mildred and ScottWilkins, we conclude that there is a genuine issue of material fact precluding a summaryjudgment. Mildred seemed unclear as to whether or not she disputed the manner in whichthe Bank applied the proceeds from the sale of collateral. However, Scott Wilkins was notuncertain. He testified that Mildred specifically objected to the application of any of theproceeds towards the second $30,000 loan. He indicated that despite her objections, theBank proceeded to first extinguish the amount owed on the second loan. While ScottWilkins believed that Mildred's $108,000 payment took care of her obligations pursuant tothe guaranty that she signed, he testified that if Mildred was still disputing the Bank'splanned applications of the collateral proceeds, then all disputes between the parties had notbeen resolved. He additionally testified that Mildred never agreed to the application of thecollateral proceeds to the $30,000 loan and that the Bank never asked her for permission.

Based upon the parties' deposition testimony, we find that there is a question as towhether or not there is a bona fide dispute between the parties. Additionally, we find thatthere was no meeting of the minds relative to having the "intent to compromise." Mildreddid not agree to the Bank's application of the proceeds to the $30,000 loan. Accordingly,there was a genuine issue of material fact regarding whether the Bank and Mildred achievedan accord and satisfaction, and so the summary judgment on that issue was improper.

For the foregoing reasons, the judgment of the circuit court of Union County ishereby reversed, and the cause is remanded.

Reversed; cause remanded.

MAAG, P.J., and WELCH, J., concur.