Contract Act, 1872 Section 126 | “Contract of guarantee”, “surety”, “principal debtor” and “creditor”.

Contract Act, 1872 Section 126

“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.