A advances a loan of Rs. 5,000 to B and C promises to A that if B does not repay the loan, C will do so. This is a
Question and options
A advances a loan of Rs. 5,000 to B and C promises to A that if B does not repay the loan, C will do so. This is a
- Contract of Guarantee
- Contract of Agency
- Contract of Indemnity
- Both a contract of guarantee and a contract of indemnity
Answer and explanation
Correct answer: A - Contract of Guarantee
C promises to discharge B's liability if B defaults: a contract of guarantee (S.126 Contract Act), with A creditor, B principal debtor, C surety. Indemnity (S.124) is a promise to save from loss, not to answer for another's default.
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