Write a note on the contract of guarantee.

by • 05/06/2013 • GeneralComments (0)320

Q-2 Write a note on the contract of guarantee.

Ans: MEANING OF A CONTRACT OF GUARANTEE [SECTION 126]

A contract of guarantee is a contract to perform a promise or discharge the liability of a third person in case of his default.

 

PARTIES TO A CONTRACT OF GUARANTEE

There are three parties to a contract of Guarantee-Principle debtor, Creditor and Surety.

 

MEANING OP PRINCIPAL DEBTOR [SECTION 126]

The person in- respect of whose default the guarantee is given is called the ‘Principal debtor\ Y is the principal debtor in the aforesaid example.

 

MEANING OP CREDITOR [SECTION 126]

The person to whom the guarantee is given, is called the ‘creditor1. Z is the creditor in the aforesaid example.

 

MEANING OP SURETY [SECTION 126]

The person who gives the guarantee is called the ‘Surety’. X is the surety in the aforesaid example.

 

EXAMPLE

Mr. Inam takes a loan of Rs. 10,000/= from Habib bank, and Zia give guarantee of repayment of loan. Here Mr. Inam is the principle debtor. Habib bank is creditor and Mr. Zia is a surety.

 

EXAMPLE

X and his friend Y enter a shop and X says to Z “Supply the goods required by Y and if he does not pay you, I will/’ It is a contract of guarantee.

 

CONSIDERATION CASE

Under Sec 127.

“Any thing done or any promise made, for the benefit of the principle debtor may be sufficient consideration to the surety for given the guarantee.” Following introductory techniques, and try to include other style techniques you http://essaynara.com/ have learned.

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