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CONTRACTS 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 their default. It involves three parties: the surety, the principal debtor, and the creditor.
What is the maximum liability of a surety in a contract of guarantee?
Co-extensive with principal debtor unless otherwise provided
Who are the three parties involved in a contract of guarantee?
The three parties are the surety (guarantor who gives the guarantee), the principal debtor (whose default is guaranteed), and the creditor (to whom the guarantee is given).
Under which act are contracts of guarantee in India governed?
Indian Contract Act, 1872
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