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A tells B, a shopkeeper, "Supply goods on credit to Z; if Z fails to pay, I will pay you." This…

Section 126 of the Indian Contract Act, 1872 defines a contract of guarantee as a contract to perform the promise, or discharge the liability, of a third person in case of…

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A tells B, a shopkeeper, "Supply goods on credit to Z; if Z fails to pay, I will pay you." This contract is a

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Correct answer C

Section 126 of the Indian Contract Act, 1872 defines a contract of guarantee as a contract to perform the promise, or discharge the liability, of a third person in case of his default. Here Z is the principal debtor, B the creditor and A the surety, and A's undertaking is expressly conditional on Z's default, so the contract is a "Guarantee" and not an "Indemnity".

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