Fact Pattern 32-1 Petro Refinery asks Quality Bank for a loan to increase its inventory. Quality requires Rob, Petro's president, to sign a personal guaranty to pay the debt if Petro defaults. Meanwhile, to make a sale of refined oil to Slick Lubricants Inc., Petro asks Slick's outside accountant Tina to co-sign a credit application.
Refer to Fact Pattern 32-1. Rob is a guarantor. The guaranty is required to be in writing because
A) the debtor has a right of redemption.
B) the co-signer has a right of contribution.
C) the main purpose rule applies.
D) the main purpose rule does not apply.

Question

Quizplus · Accepted Answer

The main purpose rule does not apply, so the guaranty must be in writing to be enforceable under the Statute of Frauds.

Fact Pattern 32-1 Petro Refinery Asks Quality Bank for a Loan