Section 127 The Indian Contract Act, 1872
Section 127 of the Indian Contract Act, 1872 deals with the Consideration for Guarantee.
🔹 Section 127 – Consideration for Guarantee
"Anything done, or any promise made, for the benefit of the principal debtor, may be a sufficient consideration to the surety for giving the guarantee."
🔍 Explanation:
For a contract of guarantee to be valid, there must be consideration (something of value exchanged).
This section clarifies that the consideration does not have to directly benefit the surety.
If the principal debtor receives any benefit, that is sufficient as consideration for the surety's promise.
📌 Example:
B lends ₹10,000 to C on A's guarantee that C will repay the loan.
Even though A (the surety) does not get any money or direct benefit, the loan to C is a sufficient consideration for A’s guarantee.
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