Question

A and B go into a shop. A says to the shopkeeper, "Let B have the goods and if he does not pay, I will". This is a _______.

• A. Contract of guarantee
• B. Contract of Indemnity
• C. Contract of Specific performance
• D. Contract of wagering

Answer 1

Answer: (A)

Contract of guarantee

Section 126 of Indian Contract Law, 1872 states, ‘Contract of guarantee’, ‘surety’, ‘principal debtor’ and ‘creditor’—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."