The Au-Cd alloys continue to be important vehicles of research for the shape memory effect involving martensitic transformations and related phenomena.They transform to a variety of martensitic structures depending on the alloy composition and thermal history. Additionally, the Au-rich alloys display rubber like behavior involving thermo-elastic memory. Defects and diffusion play important roles in determining these properties. Defects and diffusion mechanisms in the Au- 47.5 - 50.5 at.% Cd alloys are examined. Diffusion in the nanometer regime and the states of defects are found to be important contributing factors to determine the shape memory effect, the variable martensitic transformations and the rubber like behavior, which are discussed in details.