Hardaway Lending, Inc., had a four-year callable loan to Superior Metals, Inc., outstanding. The loan was...

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Hardaway Lending, Inc., had a four-year callable loan to Superior Metals, Inc., outstanding. The loan was callable at the end of each year upon Hardaway's giving 60 days written notice. Two and one-half years remained of the four years. Hardaway reviewed the loan and decided that Superior Metals was now a prime lending risk and it therefore decided to call the loan. The required written notice was sent to and received by Superior 60 days prior to the expiration of the second year. Merriweather, Superior's chief executive officer and principal shareholder, requested Hardaway to continue the loan for at least another year. Hardaway agreed, provided that an acceptable commercial surety would guarantee $400,000 of the loan and Merriweather would personally guarantee repayment in full. These conditions were satisfied and the loan was permitted to continue. The following year the loan was called and Superior defaulted. Hardaway released the commercial surety but retained its rights against Merriweather and demanded that Merriweather pay the full amount of the loan. Merriweather refused, asserting the following: a. There was no consideration for his promise. The loan was already outstanding and he received nothing. Hardaway must first proceed against Superior before it can collect from Merriweather. Hardaway released the commercial surety, thereby releasing Merriweather. a. a. Part 2: Assume that both Merriweather's and the commercial surety obligations were procured by fraud of Superior, with no knowledge of Hardaway. Also assume that no sureties were released. Discuss the liability of the sureties in this situation. Hardaway Lending, Inc., had a four-year callable loan to Superior Metals, Inc., outstanding. The loan was callable at the end of each year upon Hardaway's giving 60 days written notice. Two and one-half years remained of the four years. Hardaway reviewed the loan and decided that Superior Metals was now a prime lending risk and it therefore decided to call the loan. The required written notice was sent to and received by Superior 60 days prior to the expiration of the second year. Merriweather, Superior's chief executive officer and principal shareholder, requested Hardaway to continue the loan for at least another year. Hardaway agreed, provided that an acceptable commercial surety would guarantee $400,000 of the loan and Merriweather would personally guarantee repayment in full. These conditions were satisfied and the loan was permitted to continue. The following year the loan was called and Superior defaulted. Hardaway released the commercial surety but retained its rights against Merriweather and demanded that Merriweather pay the full amount of the loan. Merriweather refused, asserting the following: a. There was no consideration for his promise. The loan was already outstanding and he received nothing. Hardaway must first proceed against Superior before it can collect from Merriweather. Hardaway released the commercial surety, thereby releasing Merriweather. a. a. Part 2: Assume that both Merriweather's and the commercial surety obligations were procured by fraud of Superior, with no knowledge of Hardaway. Also assume that no sureties were released. Discuss the liability of the sureties in this situation.