BACHELOR OF BUSINESS ADMINISTRATION

Detailed explanation-1: -According to that section, a contract of guarantee or suretyship requires three parties : “the creditor", “the principal debtor” and “the surety". The surety is the person who gives the guarantee. The person in respect of whose default the guarantee is given is the principal debtor.

Detailed explanation-2: -In a contract of guarantee, there are three parties to a contract namely surety, principal debtor and creditor whereas in case of indemnity there are only two parties to a contract, promisor, and promisee.

Detailed explanation-3: -Retrospective guarantee – It is a guarantee issued when the debt is already outstanding. Prospective guarantee – Given in regard to a future debt. Specific guarantee – Also known as a simple guarantee, it’s a type that is used when dealing with a single transaction, and therefore a single debt.

Detailed explanation-4: -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’.

Detailed explanation-5: -A Contract to perform the promise, or discharge the liability, of a third person in case of his default is called Contract of Guarantee. A guarantee may be either oral or written.