Question

A contract of ______ is a contract to perform the promise made or discharge liability incurred by a third person in case of his default.

• A. Indemnity
• B. Guarantee
• C. Specific performance
• D. Injunction

Answer 1

The correct option is B 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."