A Surety Could Avoid Liability for a Principal's Default If

question 24

Multiple Choice

A surety could avoid liability for a principal's default if the principal had refused to pay the seller-creditor because:

• A)the principal was a minor and therefore lacked the capacity to contract.
• B)the principal had filed for bankruptcy.
• C)the principal was induced to contract with the seller-creditor by fraud or duress.
• D)the principal was insane.

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Definitions:

360-Day Year

A financial convention or calculation basis where the year is assumed to consist of 360 days rather than 365 or 366 days, often used in interest rate calculations.

Ordinary Simple Interest Rate

The standard method of calculating interest, typically based on the original loan amount, rate, and time.

360-Day Year

A conventional method in finance where the year is assumed to have 360 days for simplifying interest rate calculations, commonly used in commercial lending.

Exact Simple Interest

Interest calculated based on the actual number of days in the loan period divided by the exact number of days in a year, typically 365 or 366.