Cal Has Just Co-Signed a Car Loan for His Friend,Peter

question 27

Multiple Choice

Cal has just co-signed a car loan for his friend,Peter.This action made Cal the guarantor of the loan.In the event that Peter defaults on payment,Cal has been made liable for payment.After a few months without incident,Cal receives a notice from the bank that Peter missed a payment,and that Cal is to pay.After writing a cheque,Cal confronts Peter who said he could not afford it this month because he bought a new stereo.Cal is annoyed with Peter's irresponsible actions and informs Peter that next month he will have to pay two installments,one to the bank and one to him to make up for this month.

• A)Cal does not have the right to be reimbursed by Peter because the co-signing by Cal as guarantor automatically shifts the liability to him in the case of default and he is therefore responsible for the loss personally.
• B)Cal has the right to request the missed payment because he can assume the role of a creditor after he has made the missed payment after Peter's default.
• C)Cal can not reclaim the payment from Peter because Peter has not put into writing the intention to repay Cal in case of default,which makes the demand of repayment unenforceable.
• D)Cal is in the risky position of becoming the principal debtor on Peter's car loan in this situation.
• E)Cal can not reclaim the payment from Peter because Peter has not put into writing the intention to repay Cal in case of default which makes the demand of repayment unenforceable and Cal does not have the right to be reimbursed by Peter because the co-signing by Cal as guarantor automatically shifts the liability to him in the case of default and he is therefore responsible for the loss personally.

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Definitions:

Secondary Voltage

The output voltage of a transformer or another type of electrical machine, which is induced by the primary voltage.

Primary

In electrical systems, the initial or main input side of a transformer or circuit.

Center Tapped

A feature in transformers or electrical wires that allows for the creation of a neutral point by tapping into the middle of the windings or conductor.

Neutral Conductor

The grounded conductor of a power system. It is connected to ground potential and is considered a current-carrying conductor. The neutral is generally white or gray in color.