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Tag: define guarantee

Waging War

Sections 121 to 123 of the Indian Penal Code deal with waging war against the government. The following are considered as offences that need to be proven to constitute an offence against the government under Section 121.

IPC Provisions on Waging War

Section 121 of the IPC prohibits waging, trying to wage, or assisting in the conducting of war against the government of India. This part specifies the utmost penalty for such offences as death or eternal imprisonment. It also provides for the forfeiture of goods used in the commission of such a crime.

Furthermore, Section 122 of the IPC addresses the acquisition of weapons, ammunition, or materials to be used in war in order to conduct war against the Government of India. For such offenses, the highest penalty is life imprisonment under this provision.

Section 123 of the IPC  deals with concealing the presence or whereabouts of anyone who has done a crime under Sections 121 or 122 of the IPC. This provision specifies a potential penalty of ten years in prison, a fine, or both.

Elements of Waging War against the State

Under the IPC, waging war against the government is an offence under Section 121. The following are the key components of this offence:

  • Actively participating in or trying to conduct war against the government: This component entails actively participating in or attempting to participate in actions of war against the government. Acts such as assaulting government facilities or people, plotting and carrying out acts of terrorism or insurrection, or scheming to wage war against the government are examples of terrorism.
  • Abetting the conduct of such an offence entails encouraging, facilitating, or assisting in the execution of an infraction of making war against the government. It could include giving money or material support, harbouring or concealing criminals, or taking part in the planning or execution of such a crime.
  • Obtaining, possessing, or gathering weapons, ammunition, or war materials with the purpose of using them to wage war against the government: This aspect entails acquiring, possessing, or collecting arms, ammunition, or war materials with the intent of using them to wage war against the government.
  • Intention to conduct war against the government: This aspect entails the explicit desire to destabilize the government or damage its sovereignty, territorial integrity, or security. It must be demonstrated that the offender intended to conduct war against the government and not just cause damage or participate in criminal activity.

Continuing Guarantee

Continuing guarantee Where a guarantee extends to a series of transaction, it is called as Continuing guarantee.

Chapter VIII, Section 129 to Section 131 of the Indian Contract Act, 1872 deals with the provisions relating to

Continuing guarantee

Definition of Continuing Guarantee

Section 129 of the Indian Contract Act, 1872 defines continuing guarantee as “A guarantee which extends to a

series of transaction, is called, a “continuing guarantee”.

Illustrations

(a) A, in consideration that B will employ C in collecting the rents of B’s zamindari, promises B to be responsible,

to (b) A guarantees payment to B, a tea-dealer, to the amount of £ 100, for any tea he may from time to time supply

to C. B supplies C with tea of above the value of £ 100, and C pays B for it. Afterwards, B supplies C with tea of the

value of £ 200. C fails to pay. The guarantee given by A was a continuing guarantee, and he is accordingly liable to

B to the extent of £ 100.

Revocation of Continuing Guarantee

A continuing guarantee may at any time be revoked by the surety, as to future transactions, by notice to the creditor.

Illustrations

(a) A, in consideration of B’s discounting, at, A’s request, bills of exchange for C, guarantees to B, for twelve

months, the due payment of all such bills to the extent of 5,000 rupees. B discounts bills for C to the extent of 2,000

rupees. Afterwards, at the end of three months, Arevokes the guarantee. This revocation discharges A from all

liability to B for any subsequent discount. But A is liable to B for the 2,000 rupees, on default of C.

(b) A guarantees to B, to the extent of 10,000 rupees, that C shall pay all the bills that B shall draw upon him. B

draws upon C, C accepts the bill. A gives notice of revocation. C dishonours the bill at maturity. A is liable upon his

guarantee.

Modes of Revocation of Continuing Guarantee

A continuing guarantee can be revoked by the Surety in the following ways

(i) By Notice:A continuing guarantee can be revoked by the surety by giving notice to the Creditor as regards future

transactions only.

(ii) By Death of the Surety: If surety dies, the continuing guarantee regarding the future transaction will stand

revoked. Section 131 of the Indian Contract Act, 1872 deals with Revocation of continuing guarantee by surety’s

death it runs as follows:

“The death of the surety operates, in the absence of any contract to the contrary, as a revocation of ma continuing

guarantee, so far as regards future transactions.”

(iii) Other Mode: Continuing guarantee is revoked by all such modes when the surety is discharged from the

liability.

Relevant Case law

R.K. Devan V. State of Uttar Pradesh, AIR 1956 Mad 211 in this case, court held that Liability of deceased surety can be imposed against his legal heirs but only to the extent of the property inherited by them.

State Bank of India Vs Gemini Industries (2001) 3 Guj CD 1885. in this case, a guarantee for a cash-credit account has been held to be a continuing guarantee. the sureties could not claim to be discharged from their liability by reason of the fact that the goods in the hypothetical store were changed.

Types of Guarantee

A contract of guarantee could also be for an associate in nursing’s existing liability or future liability. A contract of guarantee may be a particular guarantee (for any specific dealings only) or a continued guarantee.

There are two sorts of guarantee contracts:

specific guarantee and an ongoing guarantee. A specific or simple guarantee is one that is made in respect of a single debt or unique transaction and is set to expire when the guaranteed debt is paid or the promise is fulfilled. An ongoing guarantee, on the other hand, is a guarantee that covers a series of transactions (Section129). In this instance, the surety’s liability would remain until all of the transactions were completed or the guarantor revoked the guarantee for future transactions.

Specific Guarantee 

A particular guarantee is for one debt or any specific dealings. It involves associates finishing once such debt has been paid.Continuing GuaranteeAct in 1872 defines 

Continuing Guarantee- 

A continuing guarantee is a form of assurance that covers many transactions. Until the surety revokes it, it applies to all transactions engaged into by the principal debtor. As a result, bankers prefer a continuing guarantee because the guarantor’s duty is not limited to the original advances and extends to all subsequent defaults.

A continuing guarantee’s most crucial feature is that it applies to a succession of separate, independent transactions (series of transactions). As a result, a promise for the full consideration cannot be considered a continuing guarantee

.A continuing guarantee applies to any or all the transactions entered into by the principal mortal till it’s revoked by the surety. a seamless guarantee may be revoked anytime by the surety for future transactions by giving notice to the creditors. However, the liability of a surety isn’t reduced for transactions entered into before such revocation of guarantee.

Illustration-

a) S is a bookseller who gives P a collection of books with the understanding that if the person P is not able to pay for the books, his or her friend X will. This is a contract of particular guarantee, and K’s liability ends the minute S receives payment for the books.

b) A wealthy landlord hires P as his estate manager after M recommends him. P was responsible for collecting rent from S’s renters each month and remitting it to S by the 15th of each month. M, as the guarantee, undertakes to make good on any defaults made by P. This is a contract with a long-term guarantee.

Revocation of Continuing Guarantee

It must be agreed upon by all three parties – All the three parties to the transaction that are the principal debtor, creditor, and surety, must consent with each other’s approval. It is to be noted that  the surety will only accept for the major debtor’s debt if the principal debtor expressly demands it. Now the outcome is that the primary debtor must interact with the surety. The surety’s communication with the creditor guarantee transaction without informing the primary debtor does not constitute a guarantee contract.

Take into account anything done for the benefit of the principal debtor is to the surety for delivering the guarantee. The consideration from the creditor, not one from the past. It is not necessary for the guarantor to receive any value, and sometimes what happens is even the creditor’s tolerance in the event of default is sufficient consideration.

Accountability – A surety’s liability is secondary under a guarantee arrangement. This tells that the primary contract was between the creditor and the principal debtor. The surety is solely responsible for repayment if the principal debtor defaults.

Assume the presence of a debt – The fundamental purpose of a guarantee contract is to ensure the payment of the major debtor’s obligation. if there is no such debt. As a result, in circumstances where the debt is time-barred or void, the surety has no duty. In the Scottish case the House of Lords concluded that there can be no legitimate guarantee if there is no principal obligation.

It must include all of the fundamental elements of a legitimate contract as the  guarantee contract is an agreement, it must meet all of the standards as a legal contract. 

No False Information – Any circumstances that may affect the surety’s obligation must be disclosed by the creditor to the surety. The confidence gained through the concealment of such knowledge is invalid. As a consequence, if a creditor secures such guarantee by omitting substantial information, the guarantee will be null and unenforceable.

There will be no misrepresentation – This to be noted that the guarantee shouldn’t be acquired by misrepresenting the facts to the surety. It does not require  the primary debtor even while it is not a contract of Uberrima fides, or ultimate good faith.

CONTRACT OF GUARANTEE

The term “guarantee” is defined by the Black Laws Dictionary as “the certainty that a legal contract will be duly enforced.”A guarantee contract is regulated by the Indian Contract Act, 1872, and comprises 3 parties, including one who serves as the guarantor if the defendant fails to meet his obligations. Whenever a party seeks a loan, products, or employment, a guaranteed contract is usually required. In such arrangements, the guarantor promises the creditor that the person in need can be trusted and that in the event of a default, he will accept responsibility for payment.

According to sec 126, “A contract of guarantee is a contract to perform the promise or discharge
the liability of the third person in case of his default”. A guarantee may be either oral or written.

Surety: A surety could be a person giving a guarantee during a contract of guarantee. Someone who takes responsibility to pay cash performs any duty for one more person just in case that person fails to perform such work.

 Principal Debtor: A principal mortal could be a person for whom the guarantee is given during a contract of guarantee.

Creditor: The person to whom the guarantee is given is referred to as a creditor. 

ESSENTIALS OF A CONTRACT OF GUARANTEE
following are the essential features of a valid contract of guarantee.

  1. Tripartite agreement:
    contract of guarantee is a tripartite agreement between the principal debtor, creditor and
    surety
  2. Consent of three parties:
    There must be a consent of all three parties
  3. It may be oral or in writing:
    A contract of guarantee may be either oral or in writing. Whereas, as per English law, the
    guarantee must be in writing and signed by the party who offers the guarantee.
  4. Existence of Liability:
    There must be an existing liability or a promise whose performance is guaranteed and such
    liability must be enforceable by law. The exception to this rule is a guarantee given for a minor’s
    debt. Though the minor’s debt is not enforceable by law, the guarantee given for the minor’s debt is
    valid.
  5. Essentials of a valid contract:
    All the essentials of a valid contract must be present in a contract of guarantee. However, the
    following points are worth noting in this regard.
    A) The principal debtor need not be competent to contract and the surety would regard as
    the principal debtor and would be personally liable to pay.
    B) Surety need not be benefited. 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.
  6. Guarantee not to be obtained by misrepresentation:
    Any guarantee which has been obtained by means of misrepresentation made by or with
    his knowledge and assent, concerning a material part of the transaction is invalid.
  7. The contract of guarantee must be supported by consideration
    We have discussed above that n contract of guarantee must have all the essential, valid
    contract. It will be interesting to know that it is not necessary that there be direct consideration
    between the surety and creditor. The law presumes that consideration received by the principal
    debtor is sufficient consideration for the surety.
  8. The promise to pay must be conditional
    It is another important essential element of a contract of guarantee. There must be a
    conditional promise to be liable for the default of the principal debtor.
  9. There should be no concealment of fact
    The creditor should disclose to the surety the facts which are likely to affect the surety’s
    liability. The guarantee obtained by the concealment of such facts is invalid.