R8 - Suretyship and Creditors' Rights

Question 1

Which is less risky, a surety or guarantor?

Answer 1

A guarantor because they are only liable after the creditor has pursued all avenues of recourse agains the debtor

Question 2

Under what conditions is a gratuitous surety released?

Answer 2

Any change to the agreement, no matter how small, and even if it decreases the risk for the surety

Question 3

Under what conditions is a compensated surety released?

Answer 3

Any material change to the agreement that increases the surety’s risk of loss

Question 4

What are the defenses of surety?

Answer 4

CPRS
Creditor acts in bad faith
Payment is made/tendered
Release of principal debtor
Surety is incapacitated/bankrupt