1. Introduction to Suretyship

Question 1

Describe the basic suretyship relationship

Answer 1

Secondary Obligor/Surety: agrees to be primarily liable for the obligation. Can be compensated or uncompensated. Uncompensated sureties receive more favorable tx under the law.

Guarantor: agrees to be secondarily liable for the obligation and is liable upon default

Guaranties of collectability: requires that creditor exhaust all legal remedies before the guarantor is liable

Accommodation party: a surety who signs a negotiable instrument, subject to A3 of the UCC

Obligee: creditor

Principal Obligor: debtor

Question 2

Discuss the basic principles and formalities of suretyship

Answer 2

Subject to K law principles: consideration (debtor’s consideration is sufficient for the surety), capacity, SOF.

Exceptions to the SOF: main purpose exception, direct undertaking exception (paying directly).

Question 3

What are two kinds of implied suretyships?

Answer 3

Necessaries doctrine

W implied surety when mortgage property as security for H debts