Ross and Sally Agree to Guarantee Tim's Debt

question 55

Multiple Choice

Ross and Sally agree to guarantee Tim's debt. Ross's maximum liabil?ity is $30,000, and Sally's is $20,000. Tim owes $20,000 and is in default. Ross pays the creditor the entire amount. In the ab?sence of an agree?ment to the contrary, Ross can recover from Sally

• A) $8,000.
• B) $10,000.
• C) $20,000.
• D) nothing.

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Definitions:

Trustee

An individual or organization that holds and manages assets on behalf of another, often within the context of a trust.

Preferred Shares

A type of stock that provides certain advantages to shareholders, such as fixed dividends and priority over common stock in asset liquidation.

Rights and Restrictions

Legal entitlements or permissions and the limitations imposed on them, often outlined in contracts or laws.

Negotiated

The process by which parties come to a mutual agreement through discussion and compromise.