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A and B enter a shop. B asks the shopkeeper to supply goods on credit to A and promises to discharge…

Section 126 defines a guarantee as a promise to perform the promise or discharge the liability of a third person in case of default. Here B is the surety, A the principal…

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A and B enter a shop. B asks the shopkeeper to supply goods on credit to A and promises to discharge A’s price liability if A defaults. This is a contract of:

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Answer and explanation

Correct answer A

Section 126 defines a guarantee as a promise to perform the promise or discharge the liability of a third person in case of default. Here B is the surety, A the principal debtor and the shopkeeper the creditor. No bailment to B or delivery as security is stated.

See sections 124 and 126 of the Indian Contract Act, 1872, and Nishant Basoya v. Registrar General, High Court of Delhi.

Option feedback

Option A

B undertakes to discharge the debt of a third person in case of default, satisfying section 126.

Option B

There is no entrustment of goods to B for a bailment purpose.

Option C

The stated undertaking is secondary liability on A’s default, which is the defined guarantee.

Option D

No goods are delivered to B as security for payment, as a pledge would require.

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