While Stella Was in Hong Kong, a Loan Came Due

question 36

Multiple Choice

While Stella was in Hong Kong, a loan came due that she had guaranteed. The creditor, a kindly old man, extended the due date on the loan for thirty days, interest free. Did this action by the creditor discharge Stella from her obligation?

• A) Yes, since Stella was not consulted on this change.
• B) Yes, because consent by Stella would be required.
• C) Yes, since her position as a guarantor was clearly prejudiced.
• D) No, since the change is obviously to the benefit of the guarantor.
• E) No, because the risk is not materially altered to her detriment.

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Definitions:

Principal Revokes

The act of a principal canceling or withdrawing the authority previously granted to an agent, effectively terminating the agent's ability to act on behalf of the principal.

Obligation Tenders

Offers made to fulfill a duty or promise, particularly in a legal or financial context, such as repaying a debt.

Agency Termination

The process by which the relationship between an agent and their principal is ended.

Violation

The act of breaking or failing to comply with a rule, agreement, or law.