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A contract of guarantee involves how many parties?
ATwo — surety and principal debtor
BThree — surety, principal debtor, creditor
CTwo — creditor and principal debtor
DFour
Answer & Solution
Correct answer: B. Three — surety, principal debtor, creditor
1. Section 126 — guarantee involves three persons: the SURETY (who gives the guarantee), the PRINCIPAL DEBTOR, and the CREDITOR.
2. There must be a primary obligation between principal debtor and creditor.
3. Hence (B).
_Source: ICAI BoS CA Inter Paper 2 — Indian Contract Act 1872_