Question

In a contract of guarantee there are how many parties

Answer 1

There are three parties to a contract of guarantee

• The contract of guarantee is described in Section 126 of the Indian Contract Act.
• It is the legal contract made to carry out the promise or release the defaulting party's liabilities in the event that he does not keep his promise.
• There are three parties to a contract of guarantee. These parties are -

Principal Debtor

1. The person who borrows the money or is responsible for paying it back and to whom a guarantee is provided

Creditor

1. The party who has pledged something of value as collateral for a loan stands to receive payment for it and is the recipient of the guarantee.

Surety/Guarantor

1. The party who pledges to make payments in the event that the principal debtor defaults

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Answer 2

In this question, we are asked to tell how many parties there in a contract of the guarantee are.

• A guaranteed contract involves three parties.
• Section 126 of the Indian Contract Act describes the contract of guarantee.
• It is the written agreement made to uphold the promise or, in the case that the defaulting party does not, free the other party from liability.
• A guaranteed contract involves three parties. Principal Debtor is one of these parties.
• The individual from whom a guarantee is given and who either borrows the money or is liable for paying it back
• Creditor
• The recipient of the guarantee is the party who has promised something of value as collateral for a loan and stands to receive payment for it.
• Surety/Guarantor - The party who guarantees payments in the case the principal defaults.

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