Henry borrows money from Commerce Bank to purchase a house.However,he moves to another city to attend graduate school and sells the house to Maria.Henry wants to be released from his payment obligations to Commerce Bank.Which of the following would release Henry from his liability to Commerce Bank?

Question

Quizplus · Accepted Answer

A novation is an agreement between the original debtor (Henry) and the creditor (Commerce Bank) to substitute a new debtor (Maria) for the original debtor, with the creditor agreeing to release the original debtor from any further payment obligations. This would be the best option for Henry to be released from his liability to Commerce Bank. Option A is incorrect because a delegation only transfers the right to perform the obligation, but Henry is still liable to Commerce Bank. Option B is incorrect because the sale of the house does not automatically release Henry from his payment obligation. Option C is incorrect because a written notice alone would not release Henry from his liability, but a novation in which Commerce Bank agrees to substitute Maria for Henry would release Henry.

Henry Borrows Money from Commerce Bank to Purchase a House