In a contract with multiple solidary debtors, A, B, and C owe W and Y in shares 2:3:5; terms specify payments conditioned on events. If Y passes the October 2019 CPA board exams, which debtor can collect from and how much?

Study for the Supernova Regulatory Framework for Business Transactions Test. Use flashcards and multiple choice questions. Each question has hints and explanations. Get prepared for your exam!

Multiple Choice

In a contract with multiple solidary debtors, A, B, and C owe W and Y in shares 2:3:5; terms specify payments conditioned on events. If Y passes the October 2019 CPA board exams, which debtor can collect from and how much?

Explanation:
In a solidary (joint and several) obligation, each debtor can be held responsible for the whole debt, and if one debtor ends up paying the creditor, that debtor can demand reimbursement from the other co-debtors in proportion to their shares of the obligation. Here A, B, and C owe W and Y in the ratio 2:3:5. That means the total debt is conceptually divided into 10 equal parts: A covers 2 parts, B covers 3 parts, and C covers 5 parts. If the total amount owed to W and Y is 16,000, then B’s share is 3/10 of that total, which is 4,800. So B can demand 4,800 from A and/or C to cover his own obligation to the creditors. The condition about Y passing the CPA board exams doesn’t change the proportional liability; it just determines whether the obligation is currently due to the creditors. Therefore the debtor who can collect is B, and the amount is 4,800.

In a solidary (joint and several) obligation, each debtor can be held responsible for the whole debt, and if one debtor ends up paying the creditor, that debtor can demand reimbursement from the other co-debtors in proportion to their shares of the obligation. Here A, B, and C owe W and Y in the ratio 2:3:5. That means the total debt is conceptually divided into 10 equal parts: A covers 2 parts, B covers 3 parts, and C covers 5 parts.

If the total amount owed to W and Y is 16,000, then B’s share is 3/10 of that total, which is 4,800. So B can demand 4,800 from A and/or C to cover his own obligation to the creditors. The condition about Y passing the CPA board exams doesn’t change the proportional liability; it just determines whether the obligation is currently due to the creditors. Therefore the debtor who can collect is B, and the amount is 4,800.

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