Module: | Fundamentals of Contracts
Q3: "A contract of guarantee is considered invalid, unless the bank provides separate, direct consideration to the surety."
✅ Correct Answer: C
This statement is false.
Section 127 of the Indian Contract Act states that anything done for the benefit of the principal debtor (e.g., the bank giving the loan) is sufficient consideration for the surety's guarantee.
No separate, direct consideration to the surety is required.
Section 127 of the Indian Contract Act states that anything done for the benefit of the principal debtor (e.g., the bank giving the loan) is sufficient consideration for the surety's guarantee.
No separate, direct consideration to the surety is required.