R8 Flashcards
What is the difference between a Surety and a Guarantor?
- Surety: Liable Immediately for the Debt of Another.
* Guarantor: Liable Only if Debtor Does not Pay.
Does a Suretyship agreement need to be in writing?
Yes, Per the Statute of Frauds MAID S
What is a Gratuitous Surety?
- Not Compensated.
- Released by Any Variation in Risk
- Promise to be surety must be made before loan is granted.
What is a Compensated Surety?
- Received Payment for their promise.
- Released by Material changed in risk.
- Consideration is Compensation.
What are a Surety’s Rights when a debtor defaults in a suretyship situation?
- Immediately Demand Payment from the Surety
- Immediately Demand Payment from the Debtor
- Immediately Go After Collateral
What are a Surety’s Rights against Debtors?
- Exoneration: Suit to Compel Principal to pay
- Subrogation: Enforcemnt of creditor’s rights against principal
- Reimbursement: Suit against Principal after Payment
What are a Surety’s Rights against Co-Sureties?
- Co Sureties are Jointly and Severely Liable
- Exoneration: Suit to Compel Co Sureties to pay Pro Rate
- Contribution: After Surety has paid, entitled to contribution for their pro rate share.
What are a Surety’s Rights against Creditors?
- No Right of Notice
- No Right to Compel Collection
- No Right to Compel Creditor to Apply Security Held
What is the pro rata formula for Co-sureties in Contribution?
•Debt Paid X (Amount of Suretyship Agreed to / Total Value of Solvent Sureties).
What are the Defenses of a Surety?
•Defrauded Principal
•Duress upon Principal
•Illegality of the Principal’s Obligation
•Discharge of Principal’s Obligation◦Payment and Tender of Payment
◦Release of Principal Debtor
◦Covenant Not to Sue
◦Incapacity or Bankruptcy
How do creditors without security interests in debtor’s property gain rights?
•Judicial Liens or Garnishment of Property
What is an Agency Relationship?
•A principal appoints another person or entity to act on their behalf.
What is required to Create an Agency Relationship?
- Principal with Contractual Capacity
- Consent of the Parties
- Writing not required unless to buy or sell land or impossible to perform in one year
What duties does an agent owe to a principal?
- Loyalty
- Obedience
- Reasonable Care
- Account for Books and Records
What are a principal’s remedies against an agent?
- Tort Damages
- Contract Damages
- Recovery of Secret Profits
- Withhold Compensation
What Duties does a Principal owe to an agent?
- Compensation
* Reimbursement
When is an agency relationship terminable?
- Terminable at will.
* Exception: Agency Coupled with an interest.
How is agency terminated by operation of law?
- Death of either principal or the agent
- Incapacity of the principal
- Discharge in bankruptcy
- Failure to acquire a necessary license
- Destruction of the subject matter of the agency
- Subsequent Illegality
When is an Agent Liable to Third Parties?
- All Unauthorized Contracts.
* If Principal is undisclosed or partially undisclosed.
Can a 3rd party pull out of a contract if they thought they were doing business with the agent, i.e. undisclosed principal?
•Negative.
What is the doctrine of Respondeat Superior?
- Principal is not liable for the torts committed by the agent.
- Exception: Employer acting in scope of employment.
What is a corporation’s filing with the state called?
-Articles of Incorporation
What is included in the articles of incorporation?
- Name of the Corporation
- Name and address of the corporation’s registered agent
- Names and addresses of each of the incorporators
- Number of Shares authorized to be issued.
What is the ultra vires act?
•Directors or officers held liable for business outside the clause of business.
