Which of the Following Is Correct Concerning Suretyship and Guaranty

question 12

Multiple Choice

Which of the following is correct concerning suretyship and guaranty?

• A) A surety is always liable from the moment the principal is in default.
• B) A guarantor is always liable from the moment the principal is in default.
• C) Both are undertakings by one person, for a consideration, to pay another person a sum of money in the event that the other person sustains a specified loss.
• D) Neither can be exonerated from liability.

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Definitions:

Forfeiture

The loss or giving up of something as a penalty for wrongdoing or breach of contract.

Reasonable Expectations

The anticipation or belief regarding a particular outcome or behavior under ordinary circumstances by a reasonable person.

Condition Subsequent

A future event or circumstance that, if it occurs, may terminate a party's obligation under a contract.

Constructive Condition

An implied condition in contracts that must be met before the obligation of the other party becomes due, even if it is not explicitly stated in the contract itself.