An interesting fact pattern on the MBE
My bar exam study materials say that the multistate bar exam (“MBE”) test writers “love” to give the following fact pattern: Anders promises CharterBank that if CharterBank will give credit to BabyCo, then Anders will pay CharterBank if BabyCo defaults. This situation is known as a suretyship.
CharterBank neglects to tell Anders that it advanced the credit to BabyCo. What result?
Technically, Anders can’t be forced to pay if BabyCo defaults. That’s because Anders made an offer for a unilateral contract to CharterBank, and under most states’ law, the offeree (CharterBank) must give prompt notice to the offeror (Anders) that it accepted the offer by full performance. Failure to give notice means that a court should discharge the contract.
In reality, I think Anders would have a hard time arguing he didn’t have notice because he would likely be a BabyCo insider, but still… it’s not hard to imagine a real life situation where it could work out like this.
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