kinds of guarantee

1. ASSIGNMENT II
BUSINESS LAW
NAME : PANDITHURAI.S
ROLL :18UR40

2. WELCOME

3. TYPES OF GUARANTEE
THE INDIAN CONTRACTS ACT DEFINES GUARANTEE AS A
CONTRACT IN WHICH ONE PROMISES TO DISCHARGE THE LIABILITY OF
THE OTHER UPON THE DEFAULT OF THE LATTER. CREDITOR, DEBTOR
AND THE SURETY ARE THE THREE PARTIES TO THE CONTRACT OF
GUARANTEE. THIS CONTRACT IS FORMED BY THE CONSENT OF THE
ALL THE THREE PARTIES TO THE CONTRACT. GUARANTEE CONTRACT
MAY BE ORAL OR WRITTEN. THE CONTRACT OF GUARANTEE IS OF
DIFFERENT TYPES DEPENDING ON THE CONTRACT’S CONTENTS AND
THE NATURE OF THE SAME. HERE UNDER ARE THE DIFFERENT TYPES
OF GUARANTEE CONTRACTS.

4. • UNILATERAL CONTRACT OF COMMERCIAL CREDIT
• BANK GUARANTEE
• LETTER OF CREDIT
• ABSOLUTE PERFORMANCE BONDS
• RETROSPECTIVE GUARANTEE
• PROSPECTIVE GUARANTEE
• SPECIFIC GUARANTEE
• CONTINUING GUARANTEE

5. UNILATERAL CONTRACT OF COMMERCIAL CREDIT
THIS IS A TYPE OF CONTRACT OF GUARANTEE USUALLY SEEN
IN TRADE TRANSACTIONS. IT COMMONLY ARISES BETWEEN THE
WHOLESALE TRADER AND A RETAIL TRADER. ALSO, IT ARISES
BETWEEN A RETAIL TRADER AND THE CUSTOMER. IN THIS TYPE OF
GUARANTEE CONTRACT, THE GOODS ARE DELIVERED AGAINST NO
PAYMENT BUT WITH AN AGREEMENT. THE AGREEMENT BETWEEN
PARTIES IS EITHER WRITTEN OR ORAL. THE AGREEMENT MAY OR
MAY NOT HAVE ANY SECURITIES AGAINST DISCHARGE OF THE
PAYMENT ON A LATER DATE.

6. BANK GUARANTEE
THIS TYPE OF GUARANTEE CONTRACT IS COMMON IN THE
CONTRACTS OF THE GOVERNMENT. ALSO, IT IS COMMON IN TENDER
FOR CONTRACTS. THIS TYPE OF GUARANTEE CONTRACT IS A
COMMERCIAL DOCUMENT. THE BANK GUARANTEE IS AUTONOMOUS
AND IS INDEPENDENT OF THE CONTRACT THAT IS UNDERLYING. IT
IS A GUARANTEE FROM A BANK AGAINST LIABILITIES.
RETROSPECTIVE GUARANTEE
WHEN THE GUARANTEE IS GIVEN FOR AN EXISTING
OBLIGATION OR DEBT, IT IS CALLED RETROSPECTIVE GUARANTEE.

7. LETTER OF CREDIT
A LETTER OF CREDIT IS AN INSTRUMENT WHICH IS WRITTEN BY
ONE PERSON TO THE OTHER ABOUT GIVING OF CREDIT. THE ONE
WHO WRITES THE LETTER, REQUESTS THE OTHER TO GIVE CREDIT
TO THE BEARER OF THE LETTER OR IN WHOSE FAVOR THE LETTER IS
DRAWN. IN THE INTERNATIONAL TRADE THIS PRACTICE IS
COMMONLY SEEN. THIS CAN BE GENERAL LETTER OF CREDIT WHICH
IS DRAWN AGAINST MERCHANTS IN GENERAL OR SPECIAL LETTER OF
CREDIT WHICH IS DRAWN AGAINST A SPECIFIC PERSON WITH ALL
THE INFORMATION ENCLOSED.

8. ABSOLUTE PERFORMANCE BONDS
ABSOLUTE MEANS PERFECT AND IT ALSO MEANS COMPLETE.
IN THIS TYPE OF GUARANTEE CONTRACT, THE SURETY PAYS THE
AMOUNT WRITTEN IN THE CONTRACT UPON THE FAILURE TO
DISCHARGE THE CONTRACT BY THE PERSON AGAINST WHOM THE
GUARANTEE IS GIVEN.
PROSPECTIVE GUARANTEE
WHEN THE GUARANTEE IS GIVEN FOR A FUTURE OBLIGATION
OR DEBT IT IS CALLED PROSPECTIVE GUARANTEE.

9. SPECIFIC GUARANTEE
THIS TYPE OF GUARANTEE IS FOR A SINGLE TRANSACTION. IT
IS EXTENDED ONLY TO A SINGLE DEBT. IT IS ALSO CALLED AS SIMPLE
GUARANTEE.
CONTINUING GUARANTEE
THIS TYPE OF GUARANTEE EXTENDS TO MORE NUMBER OF
TRANSACTIONS. IT CONTINUES UNTIL THE GUARANTEE IS REVOKED.

10. THANK YOU