Which of the Following Statements Regarding the Securing of Debt

question 109

Multiple Choice

Which of the following statements regarding the securing of debt is true?

• A) The term guarantee, otherwise known as an indemnity, refers to a primary debt obligation.
• B) To avoid problems related to consideration, lending institutions often require that guarantees be placed under seal.
• C) In every province, there is now a requirement that a guarantor appear before a notary public.
• D) Because of the principle of caveat emptor, a creditor has no obligation to protect the interests of a guarantor.
• E) As guarantees are mere formalities, there is little point in getting legal advice prior to executing one.

Identify and differentiate between intended, incidental, and donee beneficiaries.

Grasp legal principles concerning notice of assignment and its implications.

Understand international perspectives on assignment of rights, specifically regarding the legal framework in China.

Identify the criteria courts use to determine whether a party is an intended or incidental beneficiary.

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Definitions:

Annual Rate

A percentage representing the interest or growth a sum of money would earn over the course of a year.

Discounted

Reduced in price or value, often to encourage purchase or reflect the present value of future cash flows.

Simple Interest

Simple interest is a method of calculating the interest charge on a loan or investment based on the original principal amount and not on accumulated interest.

Contract

A legally binding agreement between two or more parties that outlines terms and conditions.