Restatement 124 of Security: Defining a Creditor’s Affirmative Duty to Disclose Facts that Materially Increase the Surety’s Risk
The discussion in part one of this comment examines the general enforceability of guaranty agreements in Texas, with special attention to the types of creditor behavior that can discharge guarantors from liability. Part two analyzes Texas law in an attempt to define the scope and determine the effect of a creditor's duty of disclosure to a surety. Parts three and four consider the "new" Restatement of Security section 124 duty of disclosure, with substantial coverage of the decisions that have adopted it to discharge sureties. Against this back-drop, focus then shifts in part five to the applicability of section 124 in Texas. Finally, the comment's conclusion offers suggestions to creditors so that they may best draft their guarantees to insulate against the section 124 duty.