KSLU Solved Question Papers
Contract II
Previous Year Question Paper with Solution
B.A. LL.B. (Five Years) · Sem 5
2023 Sep Examination
munotes.in
Mumbai
B.A. LL.B. (Five Years) Sem 5 Contract II 2023 Sep Question Paper with Solutions
First published on munotes.in on 21 October 2026.
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The question paper reproduced here is the paper as set by Karnataka State Law University at the 2023 Sep examination.
Contents
The questions below are the paper as Karnataka State Law University set it at the 2023 Sep examination, in the order it was set.
MarksPage
MarksPage
The Paper as Set
The questions in this volume are the questions asked at the 2023 Sep examination, reproduced as Karnataka State Law University set them, in the order it set them. Long reading passages are shortened to their first and last lines and our summary; the original paper prints them in full. Only the answers are ours. See the original question paper.
Duration 3 hours · Total marks 80 · 20 questions answered
Instructions printed on the paper
- N.B. (1) Answer all five Units. (2) One essay type question and short note/problem are compulsory from each Unit. (3) Figures to the right indicate marks. (4) Answer should be written either in English or Kannada completely.
How to use this volume
Solve the paper first, under exam conditions and against the clock. Then read the answers here and mark your own. Reading a solution before attempting the question feels productive and teaches very little, because recognising an answer is not the same as being able to write one.
Q1
Unit I
(a)Define contract of guarantee. What are the essentials of a valid contract of guarantee ?[10]
Answer
For full marks, cover: the definition (section 126) and the three parties; the three contracts inside a guarantee; the essentials one by one: a principal debt that can be enforced (Edavan Kavingal, contrasted with Kashiba), the surety's promise conditional on default, consideration (section 127 and its illustrations), consent free from misrepresentation and concealment (sections 142 and 143), the condition of a co-surety joining (section 144), capacity and the other general requirements, oral or written; a checklist.
Definition
Section 126 of the Indian Contract Act 1872 defines a contract of guarantee as "a contract to perform the promise, or discharge the liability, of a third person in case of his default". The person giving the guarantee is the surety. The person for whose default it is given is the principal debtor. The person to whom it is given is the creditor.
For example, a bank lends Rs 5 lakh to a trader, and the trader's friend promises the bank to repay if the trader does not. The bank is the creditor, the trader the principal debtor and the friend the surety.
Three contracts in one
A guarantee links three persons through three relations.
- The main contract between creditor and principal debtor, such as the loan.
- The surety's promise to the creditor to pay on the debtor's default.
- The debtor's implied promise to indemnify the surety (section 145).
Essentials of a valid guarantee
1. A principal debt or duty that the law recognises. The surety answers for "the liability of a third person". If there is no enforceable liability, there is nothing to guarantee.
Edavan Kavingal Kelappan Nambiar v. Moolakal Kunhi Raman, AIR 1957 Mad 164, applied this to a minor's debt. A surety was sued for money lent to a minor. The Madras High Court held that a surety's liability "can rest only on a valid obligation". The minor was under no legal liability, so there was no default within section 126, and the surety was not liable.
The contrast is Kashiba v. Shripat Narshiv (1894) ILR 19 Bom 697. A minor executed a bond, and her father joined in it and undertook to pay if she did not. The father was held liable. In Edavan Kavingal, the Madras High Court explained that decision. It treated the father's promise as an independent undertaking, in effect an indemnity, not a guarantee of a minor's debt.
2. The surety's liability must depend on default. The surety promises to pay only if the debtor fails. His liability is secondary. A promise to pay in any event, whatever the debtor does, is an independent promise, closer to an indemnity.
3. Consideration. Section 127 says that "anything done, or any promise made, for the benefit of the principal debtor, may be a sufficient consideration to the surety". The surety himself need receive nothing.
- In illustration (a), the creditor's agreement to supply goods on credit to the debtor is consideration for the guarantee.
- In illustration (b), the creditor's forbearance to sue the debtor for a year, at the surety's request, is consideration.
- In illustration (c), a promise given after the goods were already supplied, with nothing new in return, is void.
4. Free consent of the surety. A guarantee obtained by misrepresentation by the creditor, or with his knowledge and assent, about a material part of the transaction is invalid (section 142). A guarantee obtained by the creditor keeping silence about material circumstances is invalid (section 143). In an illustration to section 143, a creditor keeps silent about a clerk's earlier default when taking a guarantee for his conduct.
5. Any condition about a co-surety must be met. Under section 144, a person may guarantee on the term that the creditor will not act on it until another person joins as co-surety. If that person does not join, the guarantee is not valid.
6. The general requirements of a contract. The parties must be competent, the object lawful, and the agreement not declared void (section 10). A minor cannot be a surety.
7. Oral or written. Section 126 says that "a guarantee may be either oral or written". Writing is not required by the Contract Act, though banks always take it in writing.
Checklist
| Essential | Source |
|---|---|
| Enforceable principal liability | Section 126; Edavan Kavingal |
| Liability on default only | Section 126 |
| Consideration for the debtor's benefit | Section 127 |
| No misrepresentation by the creditor | Section 142 |
| No concealment by the creditor | Section 143 |
| Co-surety condition fulfilled | Section 144 |
| Capacity and lawful object | Section 10 |
| Oral or written | Section 126 |
A guarantee is not an indemnity
The essentials above separate a guarantee from an indemnity under section 124. A guarantee has three parties and the surety's liability is secondary. An indemnity has two parties, and the indemnifier's liability is primary. That is why the father in Kashiba could be held liable when a true surety for a minor could not.
Conclusion. A contract of guarantee under section 126 is a promise to answer for a third person's default, made to the creditor. It is valid only if there is an enforceable principal liability, as Edavan Kavingal shows. The surety's liability must arise on default, and there must be consideration for the debtor's benefit (section 127). The surety's consent must not be obtained by misrepresentation or concealment (sections 142 and 143). It may be oral or written.
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