What is Consideration for guarantee? Section 127of Indian Contract Act 1872
127. 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.
Illustrations
(a) B requests A to sell and deliver to him goods on credit. A
agrees to do so, provided C will guarantee the payment of the
price of the goods. C promises to guarantee the payment in
consideration of A's promise to deliver the goods. This is a
sufficient consideration for C's promise.
(b) A sells and delivers goods to B. C afterwards requests A to forbear to sue B for the debt for a year, and promises that if he does so, C will pay for them in default of payment by B. A agrees to forbear as requested. This is a sufficient consideration for C's promise.
(c) A sells and delivers goods to B. C afterwards, without consideration, agrees to pay for them in default of B. The agreement is void.
Section 126 - Contract of guarantee surety principal debtor and creditor
Section 127 - Consideration for guarantee
Section 128 - Suretys liability
Section 129 - Continuing guarantee
Section 130 - Revocation of continuing guarantee
Section 131 - Revocation of continuing guarantee by suretys death
Section 133 - Discharge of surety by variance in terms of contract
Section 134 - Discharge of surety by release or discharge of principal debtor
Section 137 - Creditors forbearance to sue does not discharge surety
Section 138 - Release of one co-surety does not discharge others
Section 139 - Discharge of surety by creditor's act or omission impairing surety's eventual remedy
Section 140 - Rights of surety on payment of performance
Section 141 - Suretys right to benefit of creditors securities
Section 142 - Guarantee obtained by misrepresentation invalid
Section 143 - Guarantee obtained by concealment invalid
Section 144 - Guarantee on contract that creditor shall not act on it until co-surety joins