Question

Westin wants to borrow $1,000 from Missy to help pay his deposit at his new apartment. Missy says she will agree to the loan him the money only if Westin promises to repay her within six months and if Betty promises to pay if Westin fails to do so. If Betty agrees to the arrangement, Betty's promise is called a:
a. unified promise.
b. collateral promise.
c. mutual promise.
d. limited promise.

Answer 1

Answer:

B. Collateral promise.

Explanation:

Collateral promise refers to a promise to pay the debt of another that is ancillary to an original promise. It is an undertaking which renders the promisor a guarantor or surety upon a debt owing by a third person who is primarily liable. It is not made for the benefit of the party making it.