Fact Pattern 19-1
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 19-1.If Robin is a guarantor, then the guaranty is required to be in writing because of
A) the debtor's right of redemption.
B) the co-signer's right of contribution.
C) the creditor's transfer of possession.
D) the Statute of Frauds.

Question

Fact Pattern 19-1
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 19-1.If Robin is a guarantor, then the guaranty is required to be in writing because of​
A) ​the debtor's right of redemption.
B) ​the co-signer's right of contribution.
C) ​the creditor's transfer of possession.
D) ​the Statute of Frauds.

Quizplus · Accepted Answer

The Statute of Frauds requires certain types of contracts to be in writing, including guaranties for the debts of another. Therefore, if Robin is a guarantor, the guaranty must be in writing.

Fact Pattern 19-1 Petro Oil Refinery Asks Quality Bank for a Loan to a Loan