Suretyship & Creditor Rights

Question 0

What are the surety’s rights against creditor?

Answer 0

• No right of notice
• No right to compel collection
• no right to compel creditor to apply security held

Question 1

3 parties in surety

Answer 1

1. Creditor (lender)
2. Principal (debtor)
3. Surety
   
   • directly liable

Question 2

What are the surety’s rights against the principal debtor?

Answer 2

Before surety pays:
1. Exoneration - suit to compel pmt

After:

1. Subrogation - enforce any rights creditor had against principal
2. Exoneration - reimbursement from principal for any amt surety paid on their behalf

Question 3

Defenses of surety

Answer 3

CPRS

• Creditor bad faith
  
  • defrauded principal
  • duress
  • illegal
• Payment & tender of pmt
• Release principal debtor
• Surety incapacity/BK