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Contract of Guarantee and Bank Guarantee
What is a contract of guarantee as defined under the Indian Contract Act, 1872?
A contract of guarantee is a contract to perform the promise or discharge the liability of a third person in case of his default. It involves three parties: the surety, the principal debtor, and the creditor.
What is the minimum number of parties required to form a valid contract of guarantee?
Three parties: surety, principal debtor, and creditor.
Who are the three parties involved in a contract of guarantee?
The three parties are the surety (person giving the guarantee), the principal debtor (person whose liability is guaranteed), and the creditor (person to whom the guarantee is given).
Who is referred to as the 'surety' in a contract of guarantee?
The person who gives the guarantee on behalf of the principal debtor.
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