Tiny borrows $20,000 from First Bank. Mike is the surety on the loan. Tiny defaults and First Bank requires Mike to pay the balance of the loan. In this case, Mike may sue:

Question

Quizplus · Accepted Answer

As the surety on the loan, Mike is legally responsible for the balance of the loan if the borrower defaults. He can then sue the borrower, Tiny, to seek reimbursement or exoneration for the amount he paid to the bank. This is a common scenario in suretyship agreements. Mike does not have legal grounds to sue the bank as they are within their rights to hold the surety responsible for the loan. Therefore, the best choice in this case is C.

Tiny Borrows $20,000 from First Bank