Rashi is a student at State University. In need of funds to pay for tuition and
ID: 2735871 • Letter: R
Question
Rashi is a student at State University. In need of funds to pay for tuition and books, Rashi asks Tiempo Loans, Inc., for a short-term loan. The lender agrees to make a loan if Rashi will have someone who is financially responsible guarantee the loan payments. Umberto, a well-known businessperson and a friend of Rashi’s family, calls Tiempo and agrees to pay the loan if Rashi cannot. Because of Umberto’s reputation, the loan is made. Rashi is making the payments, but because of illness he is unable to work for one month. He asks Tiempo to extend the loan for three months. The lender agrees, raising the interest rate for the extended period. Umberto is not notified of the extension (and thus does not consent to it). One month later, Rashi drops out of school. All attempts to collect the remainder of the loan from Rashi fail. Can Tiempo assert a claim against Umberto on the debt?
Explanation / Answer
Ans: While a person gives the guarantee of any loan for the other person who borrowed the loan then such person is required to know all the details related to loan and the changes made in the term and statement of loan.
In the given case, mr, Umberto is the guarenter for the loan borrowed by Rashi. Mr. Umberto gave a guarantee that if Rashi would not be able to pay the loan then the Tiempo can claim the payment of loan from mr. Umberto.
Therefore, Mr. Umberto shall be liable to pay the loan on behafe of Rashi in case of Rashi's failure of payment of loan.
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