If the modification of the agreement is carried out without the consent of the guarantor, which is advantageous for the guarantor, the guarantee will not be released. The change must be insignificant/insignificant, then the guarantee will not be relieved. In Anirudhan v. The Thomco`s Bank Ltd, it was held that the security had not been fulfilled because the contract between the principal debtor and the creditor was advantageous to the guarantor. [8] Although the concept of compensation and security differs on several issues, the two forms of remuneration remain with overlapping principles. This article analyzes both the similarities and differences between the two. Compensation, under p. 124 of the Indian Contracts Act, is a contract to compensate a party for a loss. The guarantee allows a person to obtain a loan for goods or employment and requires a valid consideration. While a warranty agreement has 3 parties with different responsibilities, a indemnification agreement has two parties with primary liability. There are several of these differences, with a warranty having a far-reaching principle, as opposed to compensation, which occurs occasionally.
Under article 128 of the ICA, the guarantor`s liability is that of the principal debtor, which means that the guarantor is liable to the same extent as the principal debtor. For example, if for some reason the principal debtor is not liable for the debts, the guarantor is also not liable for the same thing. In addition, the principal debtor is discharged from its debt by the creditor for any reason, and then the security is also released. This section also depends on the contract. Therefore, the guarantor`s liability depends on the terms of the contract and is not required to pay more than the principal debtor has recovered. [3] The warranty contract is a contract and can be performed as a normal contract. Article 131 of the ICA declares the revocation by death of the guarantor. Responsibility for all transactions that took place before the death of the guarantor is borne by his heirs. This contract could be derived from the circumstances. [7] This article focuses on inclusion in a warranty contract. The consideration for the guarantor`s promise may come either from the creditor or from the principal debtor.
The counterparty may benefit the guarantor, but it is not necessary for the guarantor to receive a benefit from the counterparty in the guarantee contract. This section refers to consideration, i.e. any benefit that the principal debtor or creditor receives at the request of the guarantor. The warranty contract can have two types. It can be oral or written. However, for a contract to be formed between the parties, there should be a meeting of opinions, which means that all three parties should be aware of the contract. A contract of guarantee is a promise to respond to the payment of the debt that the principal debtor assumes of the creditor or to the performance of an obligation. In case of default of the principal debtor, who is obliged to pay or pay in the first place. Therefore, the principal payment obligation exists with the principal debtor. While the secondary responsibility lies with the guarantor, that is, if the principal debtor does not pay, the guarantor comes into play. The security is provided with the consent of the principal debtor, the creditor and the guarantor, but this does not mean that there must be proof that the principal debtor entered into its obligation at the express request of the principal debtor, since the tacit request is tacitly sufficient to satisfy this requirement.
The function of a guarantee contract is to allow a person to obtain credit for goods on credit or on employment. A guarantee contract expires without valid consideration[iv]. To understand the nature of a warranty, you should refer to the following: Section 142 – Warranty Obtained by Misrepresentation. Any guarantee obtained by false declaration by the creditor is void. [16] sec. 140 – The surety cannot invoke the right to subcontract in the creditor`s security right if it has provided security for part of the contract and the creditor has provided security for the entire debt. This article stipulates that if the principal debtor is discharged on the basis of a contract between the creditor and the principal debtor or by an act or omission of the creditor, the guarantor is released. This article is linked to Article 128 of the ICA, which states that the liability of the guarantor is identical to that of the principal debtor. The reason for the performance of the guarantee lies in the fact that this exemption of the principal debtor initially extinguishes the principal obligation.
The person who gives the guarantee is called a “guarantor”. The person whose guarantee is granted by default is referred to as the “principal debtor”. The person to whom the security is granted is called a creditor. Disclaimer: – The entire content of this document has been prepared on the basis of the relevant provisions and rules and in accordance with the information available at the time of preparation. Although precautions have been taken to ensure the accuracy, completeness and reliability of the information provided, I therefore assume no responsibility. Users of this information are required to refer to the relevant existing provisions of applicable laws. The user of the information agrees that the information is not professional advice and that it is subject to change without notice. I assume no responsibility for the consequences of using this information. § 135 – In the event that an agreement is concluded between the creditor and the principal debtor to intensify the liability of the latter or to give him a guarantee of increasing the period for the performance of obligations or swearing in from top to bottom, so as not to be beyond doubt, the guarantor releases, unless he accepts such an agreement. between the parties. This will have an impact in particular throughout the approval period of the agreement.
Clearing contracts and warranty contracts convey a certain central commonality. .