Suretyship

Question 1

Surety vs Guarantor

Answer 1

Surety: Directly liable on his contract (even if the debtor not default)

Guarantor: liable only if creditor exhaust all remedies against debtor.

Question 2

what creditor can do to surety if debtor default

Answer 2

Creditor may do of any of the following :

• Immediately demand payment from surety
• Immediately demand payment form the debtor
• Immediately go after the collateral if any.

Question 3

Exoneration ?

Answer 3

Surety sue to make debtor to compel payment

Must do before surety pays creditor

Question 4

Subrogation

Answer 4

surety step into shoes of lender (after pay the principal obligation)

Enforcement of creditor’s right against principal - to recover amount paid for debtor

Question 5

Defenses of surety

Answer 5

CPR’S

C- Creditor is a bad guy - Duress, illegal
P- Payment and tender or payment from debtor or third party
R- Release of Principal Debtor
S- Surety incapacity or bankruptcy