Why Is a Guaranty Contract Similar to a Suretyship Contract

question 71

Multiple Choice

Why is a guaranty contract similar to a suretyship contract?

• A)Both a guarantor and a surety join the principal in making a promise.
• B)Both a surety and a guarantor are primarily liable for the performance of another's debt.
• C)Both a guarantor and a surety are secondarily liable for the performance of another's debt.
• D)Both a guarantor and a surety agree to answer for the obligations of a debtor.

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Definitions:

Principal

In agency law, a person who agrees to have another, called the agent, act on his or her behalf.

Agency Relationship

A legal and fiduciary relationship between two parties, where one (the agent) is authorized to act on behalf of the other (the principal) in business dealings.

Agent

A person who agrees to represent or act for another, called the principal.

Licensed Professional

An individual who has been officially authorized to perform certain specialized services or activities due to meeting specific governmental or professional standards.