Contract act
Punit Gupta
(Querist) 29 August 2011
This query is : Resolved
If Mr. A requests Mr. B to sell and deliver to him goods on credit.Mr. B agrees to do so, provided, Mr. C guarantees the paymentof the price of the goods. Is this the sufficient consideratipon for Mr. C's promise and is this arrangement a valid contract of guarantee?
Guest
(Expert) 29 August 2011
yes acting as guarantor deemed to be sufficient for consideration. It is a valid agreement of guarantee
Raj Kumar Makkad
(Expert) 29 August 2011
Yes. C is guarantor duly agreed by him for A and B has become ready to sell only on his promise so it is a valid contract for consideration.
Punit Gupta
(Querist) 29 August 2011
Dear Raj sir, is this the merely consideration C would get?
its still not clear to me...
Kindly enlighten the fact again
Punit Gupta
(Querist) 29 August 2011
Dear Ganesan sir,
your fact is still not clear to me as how mere acting as a guaranteer would be a sufficient consideration?
please brief.
Raj Kumar Makkad
(Expert) 30 August 2011
Guarantee means assurance to do in future. Assurance like insurance companies. If insurance company says that in the event of some future eventuality, it shall pay certain amount to the victim or his legal heirs as the case may be and obtains certain amount as insurance and such agreement is valid. Similar is the position in the given matter wherein one party on behalf of other assures to do an act as he stand for taker to pay its amount.
Guest
(Expert) 30 August 2011
Dear Punit,
The experts are right in their opinion. As a guarantor, it becomes the liability to get the payment made to the seller 'B' by the buyer 'A', or himself would pay the dues, as a guarantor. The agreement is quite valid and the guarantee has been accepted and goods sold by 'B' only on assurance of the guarantor, otherwise he would not have sold goods to 'A' on credit.
prabhakar singh
(Expert) 30 August 2011
A contract of Guarantee is a valid contract.The consideration element for it is governed by section 127 of The Indian Contract Act, 1872.IT READS AS"127 Consideration for guarantee..Anything done, or any promise made, for the benefit of the principal debtor, may be a sufficient consideration to the surety for giving the guarantee."
Hence the liability of a guarantor is JOINT AS WELL AS SEVERAL AND THE CREDITOR HAS RIGHT TO SUE THEM EITHER JOINTLY OR SEVERALLY.
Punit Gupta
(Querist) 31 August 2011
Dear Experts, Mr. Makkad, Mr. Dhingra and Mr. Prabhakar sir-thanking you all for the enlightenment. the query is duly resolved.
thanks tom
