Metro Brokers Practice Test

Question: 1 / 470

What occurs when multiple people sign a promissory note?

They are each individually liable for the entire debt

The lender must choose one borrower to hold accountable

They are jointly and severally liable

When multiple people sign a promissory note, they create a legal obligation that holds each signer accountable for the entire debt, leading to what is known as joint and several liability. This means that if the borrower defaults on the payment, the lender has the right to pursue any one of the signers for the full amount owed. The key aspect of joint and several liability is that it protects the lender's interests by allowing them flexibility in collecting the debt.

In practical terms, if one signer is unable to pay, the lender can seek payment from the others without needing to pursue each one in order. This arrangement fosters a greater likelihood of recovering the owed amount since the lender is not limited to one specific borrower but can choose the most financially responsible person to settle the debt.

Get further explanation with Examzify DeepDiveBeta

The note becomes invalid

Next Question

Report this question

Download Metro Brokers Practice Test PDF Study Guide
Subscribe

Get the latest from Examzify

You can unsubscribe at any time. Read our privacy policy