Posted February 1, 2014 by advocateguru in Learning Centre

Kinds of Guarantee

There are two types of guarantee namely, specific guarantee and continuing guarantee. A contract of guarantee is for a specific or future debt.  A specific guarantee is for a single debt and comes to an end when the debt guarantee is paid. A continuing guarantee is one which extends to a series of transactions. It is a continuing guarantee where A, in consideration of B’s discounting, at A’s request, bills of exchange of C, guarantees to B for 12 months, the due payment of all such bills to the extent of Rs. 10,000, or A becomes answerable to C for B’s purchases from C for 6 months to the extent of Rs. 1,000.