Upgrad LLM

guarantors right


Sir If a Guarantor takes remuneration from the Borrower for whom he has stood Guarantee, will it disqualify the Guarantors Indemnity Right

 
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practising Advocate

No ,the contract of guarantee shall be separate contract.The taking of remuneration shall be an independent contract .  once the guarantor pay the liability of the borrower ,he can claim the amount from the principle.

 
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practising Advocate

No ,the contract of guarantee shall be separate contract.The taking of remuneration shall be an independent contract .  once the guarantor pay the liability of the borrower ,he can claim the amount from the principle.

 
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practising Advocate

No ,the contract of guarantee shall be separate contract.The taking of remuneration shall be an independent contract .  once the guarantor pay the liability of the borrower ,he can claim the amount from the principle.

 
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Sir I mean if the borrower makes an agreement with guarantor that he shall pay him some amount in return of the former staying guarantor for him. In such situation will the Guarantor's right to indemnify become void

 
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Sir I am asking this question because there are lots of business men in Kerala who take Bank Loans with third party Guarantee. In return they use to pay them considerable amount as remuneration per month. But when the borrower becomes bankrupt and the guarantor's secured assets are recovered by the Bank, they file case against the borrower invoking indemnity right. In this situation the borrower is a looser because, ultimately he is loosing his assets to the guarantor instead to the creditor. So my question is that the Amounts paid to the Guarantor as remuneration is deductable from his indemnity claim or not.

 
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practising Advocate

Section 127 of contract Act  1872 .Consideration for Guarantee: Any thing done ,or any promise made,for the benefit of the principal debtor ,may be a sufficient consideration to the surety for giving the guarantee. your remuneration may be a part of consideration for guarantee.

Right Of subrogation (140).Right of surety on payment or performance:- Where a guaranteed debt has become due ,or default of the principal debtor to perform a guaranteed duty has taken place , the surety ,upon payment or performance of all he is liable for , is invested with all the rights which the creditor had against the principal debtor. Both the relevant sections are independent of each other .There should be no connection between the two sections.

 
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practising Advocate

Section 127 of contract Act  1872 .Consideration for Guarantee: Any thing done ,or any promise made,for the benefit of the principal debtor ,may be a sufficient consideration to the surety for giving the guarantee. your remuneration may be a part of consideration for guarantee.

Right Of subrogation (140).Right of surety on payment or performance:- Where a guaranteed debt has become due ,or default of the principal debtor to perform a guaranteed duty has taken place , the surety ,upon payment or performance of all he is liable for , is invested with all the rights which the creditor had against the principal debtor. Both the relevant sections are independent of each other .There should be no connection between the two sections.

 
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Advocate

Properly advised by learned Advocate Mr. Cheema, nothing more to add.

 
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Rightly advised by Mr. Cheema with reference to section 127 and 140 of Indian Contract Act.

 
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