Q: Describe section 126 of Indian Contract Act, 1872 ?

Ans: Section 126 of Indian  Contract Act mentions about Contract of guarantee’, ‘surety’, ‘principal debtor’ and ‘creditor'. A ‘contract of guarantee’ is a contract to perform the promise, or discharge the liability, of a third person in case of his default. 

The person who gives the guarantee is called the ‘surety’. If bank gives the guarantee,  the bank will be surety ; the person in respect of whose default the guarantee is given is called the ‘principal debtor’ as well as the person to whom the guarantee is given is called the ‘creditor’. A guarantee may be either oral or written. 
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