Surety's/Guarantor's Defenses

Question 1

What defenses may a surety use to limit liability

Answer 1

incapacity or bankruptcy

Question 2

A modification by the principal debtor and creditor of a contract without surety’s consent

Answer 2

will release the compensated surety only if the risk of loss is materially increased.

non compensated surety’s are released regardless

Question 3

A surety is not released

Answer 3

if the modifications are to the surety’s benefit

Question 4

when a creditor is aware of the debtor’s fraudulent misrepresentation

Answer 4

the surety can avoid liability. Makes contract Voidable

Question 5

Once a debt is paid

Answer 5

principal and cosigner are released from obligations