Flashcards in Suretyship Deck (7):
In a suretyship, if the debtor defaults what can the creditor do against surety?
Requires creditor sue debtor first
VA Statute: Surety makes a written demand to creditor to collect from debtor first.
Can a surety raise a lack of consideration to suretyship as a defense if principal defaults to obligee?
No - if surety was provided at time obligee extended credit to principal (sufficient consideration)
Yes - if surety was made after the sale
Must an suretyship be in writing?
Generally yes, unless primary reason for obligation is to benefit the surety.
Can surety raise a defense that principal had against obligee?
Yes - for fraud, duress, breach of contract (transactional)
No - for infancy/insanity, bankruptcy, or statute of limitations (personal)
Can a surety raise a statute of limitation defense that principal had against obligee?
No - personal defense that surety cannot raise.
J lends car to D and G guarantees the loan. J takes a security interest in the car he sold to D, but fails to perfect. When D defaults and J sues G, can G raise a defense on the failure to perfect?
Yes - release or other loss of security