Professional Documents
Culture Documents
OF
GUARANTEE
Prepared By:
Gandhi Vishrant V (A-13)
DEFINITION
12/07/21 2
DEFINITION (Cont.)
• There are 3
persons:
1.Principal
Debtor
2.Surety
3.Creditor
12/07/21 3
Examples Of Contract Of
Guarantee
• S requests C to lend Rs:500 to P and
guarantees that if P, fails to pay the
amount, he will pay.
12/07/21 4
Essential features of a contract
of Guarantee
1. Concurrence:
A COG requires the concurrence of all the parties to it.
12/07/21 5
Essential features of a contract
of Guarantee( Cont.)
3. Essentials of a valid contract:
All the parties must be capable of entering in to valid
contract, although principal debtor may be a person
suffering from incapacity to contract. In that case the
surety is regarded as principal debtor.
12/07/21 6
GUARANTEE & ITS
FUNCTIONS
It enables a person to get a loan, or goods on credit, or an
employment.
The guarantee is given for:
Repayment of a debt.
Payment of the price of the goods sold on credit
The good conduct or honesty of a person employed in a
particular office.
Restrospective Guarantee, given for an existing debt or
obligation.
Prospective Guarantee, given for a future debt of obligation.
12/07/21 7
GUARANTEE & ITS TYPES
Specific Guarantee:
When a guarantee extends to a single transaction or debt, it is
called a specific guarantee. It comes to an end when the
guaranteed debt is duly discharged or the promise is duly
performed.
Continuing Guarantee:
When a guarantee extends to a series of guarantee, it is called a
continuing guarantee.
12/07/21 8
12/07/21 9