Contract of Guarantee is included in the Indian Contract Act, 1872 and is defined under Section 126 as follows : A “Contract of Guarantee” is a contract to perform the promise, or discharge the liability, of a third person in case of his default. The person who gives the guarantee is called the “Surety”, the person in respect of whose default the guarantee is given is called the “Principal debtor”, and the person to whom the guarantee is given is called the “Creditor”. A guarantee may be either oral or written. Though a contract of guarantee may be oral or in writing in India it must be required to be in writing only in England. Oral Guarantee In P. J. Rajappan v. Associated Industries (P.) Ltd., 1990 (1) All India Bkg Law Judgments 321, the guarantor, having not signed the contract of guarantee, wanted to wriggle out of the situation. He contended that he did not stand surety for the ....