CONTRACT OF GUARANTEE
Section 126 of Indian Contract Act defines it as “a contract to perform the promise, or discharge the liability, of a third person in case of his default”. The person who gives the guarantee is called the “surety”, the person in respect of whose default, the guarantee is given is called the “principal debtor”, and the person to whom the guarantee is given is called the “creditor”.
Illustration: A purchases goods from B on credit. C agrees to stand as a surety which means that if A does not pay the price of the goods, he will pay. Here, A is the principal debtor, B is the creditor and C is the surety or guarantee.
Latest posts by BMS Team (see all)
- Meterdown Annual Festival is back with its 7th edition – Starts today! - January 16, 2020
- Tybms sem 6 results 2019 declared on 19th June 2019 - June 19, 2019
- TYBMS Sem 6 Results 2019 Update from BMS khabri! - June 15, 2019