Fact Pattern 32-1 Petro Refinery Asks Quality Bank for a Loan

question 44

Multiple Choice

Fact Pattern 32-1 Petro Refinery asks Quality Bank for a loan to increase its inventory. Quality requires Rob, Petro's president, to sign a personal guaranty to pay the debt if Petro defaults. Meanwhile, to make a sale of refined oil to Slick Lubricants Inc., Petro asks Slick's outside accountant Tina to co-sign a credit application.
Refer to Fact Pattern 32-1. Rob is a guarantor. The guaranty is required to be in writing because

• A) the debtor has a right of redemption.
• B) the co-signer has a right of contribution.
• C) the main purpose rule applies.
• D) the main purpose rule does not apply.

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Definitions:

Repayment of Debts

The process of paying back money borrowed from lenders, which can involve regular payments of principal and interest over a specified period.

Foreign Trade

The exchange of goods and services across international borders or territories, influencing a country's economy.

Final Ratification

The formal confirmation or validation of an agreement, treaty, or constitution.

Representative Republic

A form of government in which citizens elect representatives to make decisions on their behalf, combining elements of democracy with a republic structure.