Which of the following is correct?
1 A contract of suretyship will be void if it is not
signed by or on behalf of the principal debtor.
2 A contract of suretyship will be void if it is not
signed by or on behalf of the surety.
3 A contract of suretyship may be terminated only
I n writing.
4 A surety may rely on personal defenses, which
may be at the disposal of the principal
1. A contract of suretyship will be void if it is not signed by or on behalf of the principal debtor.
This statement is correct. In a contract of suretyship, it is necessary for the contract to be signed by or on behalf of the principal debtor in order for it to be valid. The surety alone signing the contract would not be sufficient.
Which of the surety’s common law privileges may be
specifically excluded by agreement between the parties
to the contract?
1 The benefit of excussion, division, and cession
of action
2 Only the benefit of division
3 Only the benefit of excussion and the benefit of
division
4 Only the benefit of excussion
5 Only the benefit of cession of actions
1. The benefit of excussion, division, and cession of action.
This statement is correct. In a contract of suretyship, the parties have the ability to specifically exclude certain common law privileges of the surety. The benefit of excussion, division, and cession of action are all privileges that can be excluded by agreement between the parties.
The correct option is:
4 A surety may rely on personal defenses, which may be at the disposal of the principal.
To determine which statement is correct, we need to analyze each option:
1. A contract of suretyship will be void if it is not signed by or on behalf of the principal debtor.
This statement is not entirely accurate. While it is generally necessary for a contract of suretyship to be signed by the principal debtor, the absence of their signature does not automatically render the contract void. However, the absence of the principal debtor's signature may affect the enforceability of the contract.
2. A contract of suretyship will be void if it is not signed by or on behalf of the surety.
This statement is partially correct. In most legal jurisdictions, a contract of suretyship must be signed by or on behalf of the surety for it to be valid. If the surety does not sign the contract, it could potentially be deemed void or unenforceable.
3. A contract of suretyship may be terminated only in writing.
This statement is generally correct. Terminating a contract of suretyship typically requires a written notice of termination. Written communication ensures clarity and evidence of the termination, protecting the interests of all parties involved.
4. A surety may rely on personal defenses, which may be at the disposal of the principal.
This statement is accurate. A surety, in certain circumstances, can rely on personal defenses that are available to the principal debtor. Personal defenses could include fraud, misrepresentation, duress, undue influence, mistake, lack of capacity, or discharge of the debt.
So, based on the analysis above, statement 4 is the correct option. A surety may rely on personal defenses, which may be at the disposal of the principal.