Law · Indian Contract Act

Based on the provisions of the Indian Contract Act, 1872, consider the following statements regarding the contract of guarantee: Statement 1: A contract of guarantee is a tripartite agreement where the surety's liability is secondary and co-extensive with the principal debtor. The creditor can directly sue the guarantor upon default without suing the borrower first, unless otherwise agreed. If the principal debtor is a minor, the guarantee remains enforceable against the surety, and the discharge of the principal debtor via insolvency (e.g., under IBC 2016) does not release the surety. Statement 2: A continuing guarantee can be revoked by the surety at any time for future transactions by giving notice to the creditor. The death of the surety automatically revokes it for future transactions unless the contract states otherwise. Under Section 134, a voluntary release of the principal debtor discharges the surety, whereas mere forbearance to sue (Section 137) does not. If the creditor parts with a security without the surety's consent, the surety is discharged to the extent of its value. Which of the following conclusions is correct?