Exam 31: Nature of the Debtor Creditor Relationship

Subrogation is an agreement that a party shall not be liable for loss.

Letters of credit are a two-party agreement used for financing.

When a suretyship or guaranty contract is entered into after and separate from the original transaction, there must be new consideration for the promise of the guarantor.

An agreement under which one party agrees to pay drafts drawn by a creditor is called a: ______.

A surety is liable from the moment the principal is in default.

A letter of credit cannot extend for a period of more than five (5) years.

A letter of credit must be in writing and signed by the issuer.

A surety that has made payment of a claim for which it was liable as surety is entitled to indemnity from the principal debtor.

Which of the following is not a suretyship defense?

Pasquale and Paul were sureties on the debt of Rose. Each had a $100,000 responsibility. Upon Rose's default, Pasquale paid $50,000 to the creditor. How much may Pasquale recover from Paul under the concept of contribution?

If an issuer requests its correspondent bank where the beneficiary is located to notify the beneficiary of the issuance of a letter of credit, the correspondent bank is called a(n):

An absolute guaranty creates the same obligation as a suretyship.

If there are two or more sureties and one pays more than its proportionate share of the debt, such surety has the right against the co-sureties known as: ______.