In a banking contract of guarantee, there may be two or more sureties for the same debt. These sureties are called co-sureties.
Co-sureties are jointly and severally liable for the debt. This means that each co-surety is liable for the full amount of the debt, even if the other co-sureties do not pay their share.
For example, if the debt is $100,000 and there are two co-sureties, each co-surety is liable for $50,000.
Co-sureties may be liable to each other for contribution. This means that if one co-surety pays more than their share of the debt, they can sue the other co-sureties to recover the difference.
MCQs on Co-sureties for the Same Debt in Banking Contracts of Guarantee
- Which of the following is not a characteristic of co-sureties?
- Joint liability.
- Several liability.
- Contribution.
- Indemnity.
- Answer: Indemnity. Indemnity is a right that a surety has against the principal debtor. It is not a characteristic of co-sureties.
- Co-sureties are jointly and severally liable for the debt. What does this mean?
- This means that each co-surety is liable for the full amount of the debt, even if the other co-sureties do not pay their share.
- Co-sureties may be liable to each other for contribution. What does this mean?
- This means that if one co-surety pays more than their share of the debt, they can sue the other co-sureties to recover the difference.
- The liability of co-sureties can be limited by the terms of the guarantee agreement. Is this always true?
- No, this is not always true. The liability of co-sureties cannot be limited if it would be unfair to the sureties.
- The liability of co-sureties can be discharged by the acts of one co-surety. Is this always true?
- No, this is not always true. The liability of co-sureties cannot be discharged by the acts of one co-surety if it would be unfair to the other co-sureties.