Law · Indian Contract Act, 1872
Consider the following statements regarding the contract of guarantee under the Indian Contract Act 1872: Statement 1: A contract of guarantee is defined under Section 126 as a contract to perform the promise, or discharge the liability, of a third person in case of his default. The consideration for the surety's promise is governed by Section 127. Statement 2: The liability of the surety is co-extensive with that of the principal debtor unless it is otherwise provided by the contract under Section 128. Statement 3: Under Section 139, if the creditor acts in a manner that impairs the surety's eventual remedy against the principal debtor, the surety is discharged. Which of the conclusions best represents these statements?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Statement 1 is incorrect because a guarantee must always be in writing under the central statute.
- 2Statement 3 is incorrect because the bank has no duty to avoid impairing remedies.
- 3Only Statement 1 and Statement 2 are correct.
- 4Statements 1, 2, and 3 are correct.✓
Correct answer
Statements 1, 2, and 3 are correct.
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