Section 127 Indian Contract Act 1872
Section 127 of the Indian Contract Act 1872 is about Consideration for guarantee. It is under CHAPTER VIII of the Act. CHAPTER VIII is titled OF INDEMNITY AND GUARANTEE.
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.
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.
See also:
Section 126 Indian Contract Act 1872 (“Contract of guarantee”, “surety”, “principal debtor” and “creditor”)
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