A ________ is a contract between a creditor and a third party who agrees to pay another person's debt and is primarily liable for the debt whereas in a ________, a third party, must pay a debt only after the debtor has defaulted.

Question

Quizplus · Accepted Answer

In a suretyship, the third party (the surety) agrees to be primarily liable for the debt of another, meaning they agree to pay the debt if the primary debtor does not, without requiring the creditor to exhaust remedies against the debtor first. In a guaranty, the guarantor agrees to pay the debt only after the primary debtor has defaulted, making the guarantor's obligation secondary to the debtor's.

A ________ Is a Contract Between a Creditor and a Third