contract of guarantee

Essential elements of a contract of guarantee has the following–  1. free consent, competence of parties with regard to age, soundness of mind, etc..

However, so far as consideration is concerned, it is not separately needed for the Surety in the Contract of guarantee: Section 127 expressly provides that –‘anything done or any promise made, for the benefit of the principal debtor, may be sufficient consideration to the Surety for giving the guarantee.’ 2. There is an existing debt or duty, the performance performance of which is is guaranteed by the surety. 3.There must be a distinct promise by the surety to be answerable for the liability of the Principal Debtor. 4. In a contract of guarantee , there are three parties , viz., the creditor, creditor, the principal debtor and the surety. The surety is liable liable in case of the default of the principal debtor. 5.The liability of the surety to the creditor is collateral or secondary, the primary liability being that of principal debtor. 6. Liability of the principal debtor  must be legally enforceable - Only if the liability of the  principal debtor is legally enforceable, the surety can b e made liable. 7. In a contract of guarantee , there are three contracts: one between the principal debtor and the creditor, the second between the creditor and surety, and the third between the surety and the  principal debtor. 8. Contract of guarantee should be without misrepresentation. :Section 142 specifies that a guarantee obtained by misrepresenting facts by the Creditor that are material to the agreement is invalid. 9.Contract of guarantee should be without concealment. section 143 specifies that a guarantee obtained by concealing a material fact by the Creditor by keeping silence is invalid. 10.Sue the principal debtor: The surety surety , after after discharg discharging ing the debt due by the princi principal pal debtor , can proceed against the principal debtor