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A shopkeeper sells goods on credit to P. At P’s request, S promises the shopkeeper to pay the price if…

Section 126 defines a guarantee as a promise to perform another person’s obligation or discharge that person’s liability in case of default. P owes the price and S…

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A shopkeeper sells goods on credit to P. At P’s request, S promises the shopkeeper to pay the price if P defaults. What is the most specific statutory classification of S’s promise?

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Answer and explanation

Correct answer A

Section 126 defines a guarantee as a promise to perform another person’s obligation or discharge that person’s liability in case of default. P owes the price and S undertakes to pay if P defaults.

Option feedback

Option A

S undertakes to discharge the liability of P, the principal debtor, in the event of P’s default.

Option B

The stated promise answers for an existing or resulting liability of P on default. Section 124 describes an undertaking to save another from loss.

Option C

The parties arrange payment of a sale price. The facts contain no stake on an uncertain outcome.

Option D

The facts expressly identify a third party’s debt and a promise to pay upon that debtor’s default, the specific case governed by section 126.

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