Question

Rico signs a lease on behalf of Start-Up Games, Inc., with Tower Office Suites. As part of the lease, Rico signs a document titled "GUARANTY," which states that it is "an absolute guaranty" of the lease's performance.

Refer to Fact Pattern 12-1. If Rico is held responsible for paying the rent under this lease, it will be because:

A) Rico personally guaranteed the lease
B) Tower Office Suites failed to maintain the property
C) Start-Up Games, Inc. has declared bankruptcy
D) The court ruled in Rico's favor

Answer 1

Rico would be held responsible for the lease if Start-Up Games, Inc. fails to pay because he signed a personal guaranty of the lease's performance.

Step-by-step explanation:

If Rico is held responsible for paying the rent under this lease, it will be because Rico personally guaranteed the lease. By signing a document titled "GUARANTY" which states that it is "an absolute guaranty" of the lease's performance, Rico has agreed to be personally liable if Start-Up Games, Inc. fails to fulfill their leasing obligations. The guaranty ensures that the landlord, Tower Office Suites, has another party (Rico) to turn to for payment, should the company default on the rent.

Answer 2

Rico is held responsible for paying the rent under this lease because he personally guaranteed the lease.

Step-by-step explanation:

If Rico is held responsible for paying the rent under this lease, it will be because Rico personally guaranteed the lease. When Rico signed the document titled 'GUARANTY' which stated that it is an 'absolute guaranty' of the lease's performance, he assumed personal liability for the lease obligations. This means that if Start-Up Games, Inc. fails to pay the rent, Tower Office Suites can hold Rico personally responsible for payment.