Fred of Fred Friendly's garage owes 1st National Bank of Grutz, $40,000 on a previous loan.Fred needs additional capital and asks Grutz for a second loan of $10,000.Grutz will not do so unless Boris,Fred's principal supplier, and major creditor, will guarantee the second loan.Boris calls Grutz on the telephone and says he will pay Fred's loan if Fred doesn't.Grutz leaves the speaker phone on so all his employees here Boris's promise.

Grutz extends the loan to Fred.Fred ultimately defaults on this loan owing Grutz $10,000.

Please explain the basic rule and any exceptions that apply,Fully explain you