Cengage Advantage Books: Law for Business 19th Edition by John Ashcroft,Katherine Ashcroft,Martha Patterson

Exercise 9

Risk-Bearing Devices
James Carlson founded PRACS Institute, Ltd. (PRACS) as a medical research facility. Sterling Development Group Three, LLC (Sterling), leased a building to PRACS, and Carlson signed a personal guaranty. Subsequently, Carlson sold PRACS to Contract Research Solutions, Inc. (Solutions). Sterling consented to this change in control under the lease. Solutions and Sterling entered into several modifications of the lease agreement concerning the provision of janitorial services, tax payments, and the contractual method for calculating base rent. When Solutions later filed for bankruptcy and stopped paying rent, Sterling sued Carlson on the guaranty. Carlson defended that the lease modifications were made without his knowledge or consent. Were these modifications sufficiently material to release Carlson from his guaranty? [ Sterling Development Group Three, LLC v. Carlson , 859 N.W.2d 414 (N.D.)]