Exam 32: Nature of the Debtor-Creditor Relationship

The creditor first must proceed against the debtor before suing the surety.

A letter of credit:

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

In most states contracts of guaranty do not have to be in writing to be enforceable.

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

In a guaranty contract,the obligor is called a:

Sureties have no rights to protect them from loss,to obtain their discharge because of the conduct of others that would be harmful to them,or to recover money that they were required to pay because of the debtor's breach.

A third party arrangement occurs when a corporate officer agrees to be personally liable for a corporate note.

When a surety pays a claim that it is obligated to pay,it automatically acquires the claim and the rights of the creditor which is known as subrogation.

A surety that has made payment of a claim for which it was liable as surety is not entitled to indemnity from the principal debtor.

An absolute guaranty creates the same obligation as a suretyship.

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):

A guaranty of payment creates a(n):