A “contract of guarantee” is a contract to perform the promise, or discharge the liability, of a third person in case of his default. The person who gives the guarantee is called the “surety”; the person in respect of whose default the guarantee is given is called the “principal debtor”; and the person to whom the guarantee is given is called the “creditor”. A guarantee may be either oral or written. (Section 126 of the Indian Contract Act, 1872) A guarantee which extends to a series of transactions is called a “continuing guarantee”.

**COUNTER GUARANTEE FIDELITY GUARANTEE PERFORMANCE GUARANTEE** A “contract of guarantee” is a contract to perform the promise, or discharge the liability, of a third person in case of his default. The person who gives the guarantee is called the “surety”; the person in respect of whose default the guarantee is given is called the “principal debtor”; and the person to whom the guarantee is given is called the “creditor”. A guarantee may be either oral or written. (Section 126 of the Indian Contract Act, 1872) A guarantee which extends to a series of transactions is called a “continuing guarantee”. A guarantee, guaranteeing an employer against the misconduct of an employee or to answer for the debt or default of another, is called a “fidelity guarantee”. A guarantee given by the principal debtor to the surety providing him continuing indemnity against any loss or damage that the surety may suffer on account of default on the part of the principal debtor, is called “counterguarantee”. A guarantee which ensures the contracted performance of another person and under which the surety undertakes to compensate the person in whose favour the guarantee is given, in the event of failure on the part of the person on whose behalf the guarantee is given, is known as “performance guarantee”. Thanks