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Contracts of Guarantee & Bank Guarantee- I AND Deferred Payment 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 liability of a surety described as in legal terminology?
Surety's liability is secondary and contingent on principal debtor's default.
Who are the three parties involved in a contract of guarantee?
The three parties are the surety (the person who gives the guarantee), the principal debtor (the person for whom the guarantee is given), and the creditor (the person to whom the guarantee is given).
Under the Indian Contract Act, who is called the 'principal debtor' in a guarantee?
The person for whom the guarantee is given is the principal debtor.
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