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Under a contract of guarantee:
  • a)
    if principal debtor is not liable, guarantor is not liable
  • b)
    if principal debtor is not liable, guarantor is liable
  • c)
    if principal debtor is liable, guarantor is liable
  • d)
    all the above
Correct answer is option 'C'. Can you explain this answer?
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Under a contract of guarantee:a)if principal debtor is not liable, gua...
Contract of Guarantee


  • Principal Debtor's Liability: In a contract of guarantee, the guarantor agrees to pay the debt or fulfill the obligation of the principal debtor in case the latter fails to do so.


  • Guarantor's Liability: If the principal debtor is found to be liable and fails to fulfill their obligation, the guarantor becomes liable to fulfill the debt or obligation on behalf of the principal debtor.


  • Non-Liability of Principal Debtor: If the principal debtor is not liable, then the guarantor is also not liable as there is no debt or obligation to fulfill in such a scenario.


  • Liability of Guarantor: The guarantor's liability is contingent upon the liability of the principal debtor. If the principal debtor is found liable and fails to fulfill their obligation, then the guarantor becomes liable to fulfill the debt or obligation.


Therefore, in a contract of guarantee, the liability of the guarantor is directly linked to the liability of the principal debtor. If the principal debtor is liable, then the guarantor is also liable to fulfill the debt or obligation. On the other hand, if the principal debtor is not liable, then the guarantor is also not liable to fulfill any debt or obligation.
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Under a contract of guarantee:a)if principal debtor is not liable, guarantor is not liableb)if principal debtor is not liable, guarantor is liablec)if principal debtor is liable, guarantor is liabled)all the aboveCorrect answer is option 'C'. Can you explain this answer?
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Solutions for Under a contract of guarantee:a)if principal debtor is not liable, guarantor is not liableb)if principal debtor is not liable, guarantor is liablec)if principal debtor is liable, guarantor is liabled)all the aboveCorrect answer is option 'C'. Can you explain this answer? in English & in Hindi are available as part of our courses for CA Foundation. Download more important topics, notes, lectures and mock test series for CA Foundation Exam by signing up for free.
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