Unformatted text preview: Subrogation – the right of a surety who has paid the creditor to assume all the rights the creditor has against the principal debtor. creditor Contribution – the right to payment from each cosurety of his proportionate share of the amount paid to the creditor. the Fundamental Rights of Debtor and Secured Party Secured
(1) To redeem collateral by payment of debt (2) To possess general rights of ownership as limited by security agreement (1) To recover amount of debt (2) To have collateral applied to payment of the debt on default D SP
security interest in collateral Personal Defenses
s s s … of Principal Debtor – incapacity, of discharge in bankruptcy, and setoff. discharge … of Surety – incapacity, the statute of of frauds, contract defenses to suretyship undertaking, setoff, modification of the contract between the creditor and the principal debtor, and the creditor's release of security or a cosurety. security … of Both Surety and Principal Debtor – of include contract defenses to the contract between the creditor and the principal debtor. between Defenses of Surety & Principal Debtor
PD’s incapacity PD’s discharge in bankruptcy PD’s setoff against C Forgery of PD’s signature C’s fraud or duress on PD Fraudulent and material alteration of contract Absence of mutual assent or consideration for PD’s contract C’s nonperformance of PD’s contract Illegality or impossibility of PD’s contract Payment or performance of PD’s obligation C’s release of PD unless C reserves his rights against S C’s refusal of tender S’s incapacity Statute of frauds Absence of mutual assent or consideration for S’s contract C’s fraud or duress on S Cosurety’s failure to sign contract S’s setoff against C Modification of contract between PD and C Extension of time unless C reserves rights against S Release of security Release of cosurety unless C reserves his rights against S Surety Principal Debtor...
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