Section 126 of Indian Contract Act, 1872

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Section 126 of Indian Contract Act, 1872 defines various terms: 'Contract of Guarantee', 'Surety', 'Principal Debtor' and 'Creditor'.

From the Act

A "contract of guarantee " is 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 ". A guarantee may be either oral or written.

Notes

Recent / Related Cases

  • A Contract of Guarantee is a tripartite agreement involving three parties.
  • The guarantor is totally unconnected with the contract guaranteed, except through the medium of guarantee.
  • A Contract of Guarantee can be in written or oral form but in banking practice, it is always written.

Related sections from the Act

  • Section 127: Consideration for guarantee
  • Section 128: Surety's liability
  • Section 129: "Continuing guarantee"
  • Section 130: Revocation of continuing guarantee
  • Section 131: Revocation of continuing guarantee by surety's death
  • Section 141: Right to securities
  • Section 42: Devolution of joint liabilities

Related Acts

Related Topics