Presentation on Guarantee: Presentation on Guarantee Presented By- Group -4 Meaning of Guarantee: Meaning of Guarantee According to Indian Contract Act (Section 126) defines as “A contract to perform the promise or discharge the liability of a third person in case of his default.” As per English law : As per English law A guarantee is defined as “ a promise made by one person to another to be collaterally answerable for the debt, default or miscarriage of a third person and must be evidenced in writing” Parties: Parties There are three parties in contract of guarantee:- Surety 2. Principal Debtor 3. Creditor Legal Rule Of Guarantee: Legal Rule Of Guarantee Existence of principal Debt Consideration for a contract of guarantee There should be no misrepresentation or concealment Essential element of valid contract. Type of Guarantee: Type of Guarantee Absolute and Conditional Guarantee Retrospective and prospective Guarantee General and special Guarantee Limited and unlimited Guarantee Continuing Guarantee. Rights of the Creditor: Rights of the Creditor The creditor is entitled to demand payment from the surety as soon as the principal debtor refuse to pay or makes default in payment. Where surety is insolvent, the creditor is entitled to proceed in the surety’s insolvency and claim the pro rata dividend. Right of Surety: Right of Surety Right against the creditor. Right against the principal debtor. Right of subrogation Right to be Indemnified 3. Right against the co-sureties. Rights of contribution Equally contribution Discharge of Surety: Discharge of Surety By death of surety By variance in terms of contract By release or discharge of principal debtor By compounding with, or giving time to , or agreeing not to sue, principal debtor By creditor’s act or omission impairing surety’s remedy Loss of security.