Multidimensional Personality Of The 'Surety'

Ramni Sachin Hangirgekar, BA LL.B. (H), Symbiosis Law School, Pune

INTRODUCTION

The Indian Contract Act is divided into two sections: the General Provision, which covers sections 1 through 75 of the Indian Contract Act of 1872, and the Special Contract, which covers sections 124 through 239 of the same law. The many rules, terms, and circumstances for entering into a contract are discussed in the first portion, which contains general provisions. The second, which is a particular contract, discuss various contract kinds that we have already covered, including contracts of agency, bailment, guarantee, and pledge. Every guarantee assumes the risk of default, which varies based on the situation and can be more or lower in specific scenarios.

According to Section 126 of The Indian Contract Act, 1872, “a guarantee is a contract to carry out the promise or release the liability of a third person in the event of his default”. The individual providing the guarantee is referred to as the “surety,” the individual whose default the guarantee is granted is referred to as the “primary debtor,” and the individual to whom the guarantee is offered is referred to as the “creditor.”

This means that a guarantee is a contract whereby the surety, a third party who is the second source of obligation, will discharge the liability if the principal debtor, who is the first source of liability, fails to pay the debt to the creditor.