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30 Cards in this Set
- Front
- Back
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What is the exception to the general rule that a promise to serve as a surety must be supported by consideration?
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No consideration is required when surety signs promissory note.
draw piC-Consideration. |
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What is the exception to the general rule that suretyship promises must be in writing?
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Main Purpose Rule: there is no writing required if surety's main purpose is to benefit himself.
draW pic. W=writing |
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What is the exception to the general rule that a surety has immediate and direct liability ont he principal debtor's debt?
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The North Carolina special statute! Surety can force creditor to go after debtor 1st for any collateral given for debt.
AND/OR person signs as "guarantor of collection" draw pIc. I=immediate and direct liability |
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What are the paying sureties' three rights:
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RES: Reimbursement, Exoneration, and Subrogation.
dRaw pic. R=Repayment Right |
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What type of contribution is a paying surety entitled to, absent an agreement to the contrary?
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pro-rata.
draw Pic. P: pro-rata payment |
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What are the exceptions to the general rule that a surety can assert against the creditor any defense that is available to the debtor?
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III: Infancy, Incapacity, Insolvency (bankruptcy)
Draw pic. D=Defenses available to debtor. |
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When will a surety be discharged in the underlying contract?
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If a creditor and debtor alter the underlying contact which results in an impairment of the collateral, then a surety will be wholly or partially discharged.
drAw pic. A: Alteration discharge |
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What do you need to have a proper surety contract?
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Consideration flowing from the surety, satisfaction of Statute of Frauds, and no misrepresentations by the Creditor (good faith).
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What is the rule regarding the difference between suretyship and a personal guaranty?
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In general, there is no difference if the contract refers to the surety as a surety or guarantor. However, if a person signs as "guarantor of collection" then that person is not liable until the creditor first exhausts remedies a/g the principal debtor or shows that pursuit of such remedies would be futile.
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What is the impact of a promissory note on a surety?
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1.) A signature on a promissory note requires no consideration.
2.) Also, if there is a promissory note, then the discharge of the debtor will not discharge the surety. 3.) A modification will only discharge the surety if the surety suffers loss as a reult of modification. 4.) a surety is entitled to presentment and notice of dishonor. |
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When will parol evidence not be allowed to establish suretyship status?
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1.) If the contract has been assigned to 3rd party.
2.) If the Creditor does not know of surety relationship. |
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What two things do you need to establish the Main Purpose doctrine?
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1.) A promise by the surety
2.) economic benefit (not personal) |
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When can a SH be held liable as a surety?
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1.) SH orally agrees to be laible for a debt
2.) SH is officer/director 3.) SH owns a large percentage of corporation. |
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What is requirements for a surety to satisfy to make the creditor go after the debtor?
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1.) The surety's request must be in writing sent by REGISTERED mail
2.) The creditor must commence action against the debtor or the collateral w/n 30 days. 3.) If the creditor does not act within the time limit, then the surety is discharged only to the extent of any loss caused by delay. |
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What do you need to have to have a lien against another person's property?
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1.) work, storage, was done pursuant to a contract
2.) and in the ordinary course of your business. OPP Other people's property Pursuant to contract (ordinary purpose) |
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Real Property Lien Elements
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FCOIL:
F: furnish labor or material C: pursuant to Contract O: with owner or successor in interest I: for an improvement thereon L: right to file a lien |
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Who has priority, mortgage or materialman's lien?
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First in time wins: if bank filed before contractor furnished labor or material's then bank wins.
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How does a second tier subcontractor assert a lien a/g funds?
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send a letter to the person who owes $ and include a brief description of work performed.
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What are the consequences of ignoring a letter asserting a claim of lien upon funds?
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- the owner becomes personally liable to sub and
- sub can get a lien on the owner's land. |
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When can a sub get a lien upon the landowner's real estate?
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First tier subs have two potential claims 1.) improper payment lien and 2.) subrogation lien.
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What type of judgments give rise to judgment liens?
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Money judgments
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What does a judgment lien attach to?
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Only real property, not personal property
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How long does a judgment lien last?
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10 years
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What causes a judgment lien to be subordinate to a purchase money mortgage?
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the doctrine of instantaneous seisin.
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What must occur to give rise to a lien?
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the judgment must be docketed
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What type of property and how do two judgment liens share in that property?
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After acquired property and pro-rata.
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Under what circumstance does a personal lien terminate?
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When the lienor voluntarily gives up possession.
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What extent does a materialman's lien attach?
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It attaches to the improvement and to such surrounding area as is "reasonably necessary for the convenient use and occupation of the building."
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When does a lien attach?
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The first furnishing of labor or materials, and NCSC ruled that the lien is to be dated from the frist VISIBLE commencement of work.
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Will a surety be discharged if the creditor extends the time to the debtor?
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yes, BUT ONLY IF the creditorn and the principal debtor came to an agreement without knowledge or consent of the surety OR if the surety is a gratuious surety. if the surety is a COMPENSATED surety, then the surety will only be discharged to the extent he can show loss due to the extension.
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