Fact Pattern 21-1
Petro Oil Refinery asks Quality Bank for a loan to increase its oil inventory. Quality requires Robin, Petro's president, sign a personal guaranty to pay the debt if Petro defaults. Meanwhile, to sell fifty barrels of refined oil to Slick Lubricants, Inc., Petro asks its outside accountant Tina to co-sign a credit application.
-Refer to Fact Pattern 21-1. If, after the loan agreement is signed, Slick agrees to a higher rate of interest without telling Tina, then Tina is
A) discharged from the agreement.
B) liable at the higher rate of interest.
C) liable at the lower rate of interest.
D) liable for the principal only.

Question

Fact Pattern 21-1
Petro Oil Refinery asks Quality Bank for a loan to increase its oil inventory. Quality requires Robin, Petro's president, sign a personal guaranty to pay the debt if Petro defaults. Meanwhile, to sell fifty barrels of refined oil to Slick Lubricants, Inc., Petro asks its outside accountant Tina to co-sign a credit application.
-Refer to Fact Pattern 21-1. If, after the loan agreement is signed, Slick agrees to a higher rate of interest without telling Tina, then Tina is​
A) ​discharged from the agreement.
B) ​liable at the higher rate of interest.
C) ​liable at the lower rate of interest.
D) ​liable for the principal only.

Quizplus · Accepted Answer

Tina is discharged from the agreement because a material alteration, such as a change in the interest rate, was made without her consent.

Fact Pattern 21-1 Petro Oil Refinery Asks Quality Bank for a Loan to a Loan