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Contract of guarantee

Sir /madam, if debtor fails to pay money to creditor then surety is liable to pay to creditor for that amount but still surety can recover that amount from debtor because there is implied contract of indemnity between surety and debtor. Incase if the principal debtor is a minor and that minor fails to pay to creditor so surety paid that amount to creditor. Can a surety recover that amount from minor debtor ? Is there still a implied contract of indemnity between surety and minor debtor?


Balamurugan Venkateswaran

Balamurugan Venkateswaran

CA Inter

475

01-Apr-21 18:12

45

Answers (2)

Best Answer

Even though there is an implied contact between such minor debtor & surety, it's null in the eyes of law. Surety cannot sue the minor to recover amount due. Minor can only be part of the contract as a beneficiary. From an exam perspective, above is enough. Practically, a provision that may have selective applicability is one under Sec 68 - Claim for necessaries (read at Foundation level). This section can be used in the court of law by the surety to recover sums from minor property provided surety proves that the loan amount was used for necessity of the minor debtor (Eg: student education loan)


Sahibdeep Singh

Sahibdeep Singh

Moderator

02-Apr-21 20:39