With reference to Section 126 of The Indian Contract Act, 1872 read the following statements and select the correct option from below:

1. Guarantee must always be written

2. A guarantee may either be either oral or written

Solution

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.