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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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