Final answer:
A surety may successfully assert defenses such as lack of consideration, fraud by the creditor, material alteration of the contract,
Step-by-step explanation:
A surety is a person who takes responsibility for the debt or obligation of another party, known as the principal debtor. To limit their liability to a creditor, a surety may assert the following defenses:
- Lack of consideration: The surety can argue that there was no valid consideration for their agreement to act as a surety, thereby invalidating the contract.
- Fraud by the creditor: If the creditor engaged in fraudulent behavior or misrepresentation that induced the surety to enter into the contract, the surety may assert this defense to limit their liability.
- Material alteration of the contract: If the terms of the contract are materially altered without the surety's consent, the surety may be released from their obligations.
- Payment by the principal debtor: If the principal debtor has already fully paid the debt owed to the creditor, the surety's liability may be extinguished
The defenses that a surety might assert successfully to limit liability to a creditor include fraud by the creditor, material alteration of the contract, and payment by the principal debtor. Lack of consideration may not apply in this context because the very role of a surety assumes consideration in the form of the agreement between the surety and the creditor. However, if the creditor has committed fraud, it would undermine the validity of the contract, enabling the surety to potentially evade liability. Similarly, if the contract has been materially altered without the consent of the surety, the surety may not be obligated to the terms of the altered contract. Lastly, if the principal debtor has already made the payment, the surety's responsibility would be extinguished as the debt is cleared.