Essential Characteristics of Contract of Guarantee and Kinds
What are the e ssential characteristics of contract of guarantee and kinds? A contract of guarantee is a type of contract where one party (the guarantor) agrees to take on the responsibility of paying a debt or fulfilling an obligation if the principal debtor fails to do so. Here are the essential characteristics and kinds of contracts of guarantee: Essential Characteristics 1. Tripartite Agreement: Section 126 - A contract of guarantee is a tripartite agreement between the principal debtor, the creditor, and the guarantor. 2. Secondary Liability: Section 128 - The guarantor's liability is secondary to that of the principal debtor. 3. Consideration: Section 127 - The guarantor must receive consideration for their guarantee. Kinds of Contracts of Guarantee 1. Specific Guarantee: Section 129 - A guarantee that is limited to a specific debt or obligation. 2. Continuing Guarantee: Section 130 - A guarantee that covers all future debts or obligations of the principal debtor...