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      Question

      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
      A 1 is correct 2 is not correct Correct Answer Incorrect Answer
      B Both 1 and 2 are correct Correct Answer Incorrect Answer
      C 1 is not correct 2 is correct Correct Answer Incorrect Answer
      D Both, 1 & 2 are not correct Correct Answer Incorrect Answer

      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.

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