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of <h1>Understanding Section 127: Guarantee Validity Hinges on Benefiting the Principal Debtor for Consideration in Contracts.</h1> Section 127 of the Indian Contract Act, 1872, addresses the consideration necessary for a guarantee. It states that any action taken or promise made for the benefit of the principal debtor can serve as adequate consideration for the surety to provide a guarantee. The section provides illustrations: if a seller agrees to deliver goods on credit based on a third party's guarantee, or if a creditor refrains from suing a debtor at the request of a third party who promises to pay in case of default, these constitute valid considerations. However, a guarantee given without any consideration is void.
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