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Question
John agreed to act as surety for a loan taken by his son, Frank, from the Third National Bank. The terms of the loan provided that Frank would pay the loan off in 12 monthly installments at 10%. If Frank renegotiates the terms of the loan with the bank and is now obligated to pay the loan off in 12 monthly installments at 9%, which of the following statements is true?
A. Renegotiation of the note by Frank does not relieve John of liability as surety because the new terms are more favorable than the original terms.
B. John must notify the bank in writing that he no longer wishes to act as surety in order to avoid liability under the new terms.
C. John must notify Frank in writing that he no longer wishes to act as surety in order to avoid liability under the new terms.
D. John is no longer obligated because his responsibilities as a surety cannot be changed without his consent.
Answer
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