Glenn decided to borrow from Jones Bank since it promised that his loan interest rate would be systematically reduced every year when the board met.The loan rate was never reduced,but actually increased monthly.Glenn refused to pay the interest demanded and sued for rescission of the contract;thereupon,the bank attempted to collect from Lewis,a surety under the loan.Does Lewis have to pay?

Question

Quizplus · Accepted Answer

If the bank promised to reduce the loan interest systematically every year but failed to do so and actually increased the interest, this amounts to a misrepresentation or fraud. Glenn can use fraud as a defense to avoid paying the interest demanded. Lewis, as a surety, is only liable if Glenn is liable under the loan contract. Since Glenn can avoid paying due to the fraud, Lewis is also not liable. Hence, option B is the best answer.

Glenn Decided to Borrow from Jones Bank Since It Promised