https://www.taxtmi.com/caselaws?id=286828 A letter of comfort did not create a contract of guarantee under Section 126 of the Indian Contract Act, 1872 because it contained no clear undertaking by the appellant to discharge the borrower's liability on default. The document only referred to the borrower as an associate company and expressed that reasonable steps would be taken to ensure its financial and contractual obligations, which amounted to an assurance rather than a binding guarantee. Liability as guarantor or surety cannot extend beyond the express terms of the engagement. The Karnataka HC therefore held that the appellant was not liable for the borrower's debt, and the liability fastened on it was set aside. en-us Tue, 16 Aug 2011 00:00:00 +0530 Thu, 21 Dec 2023 10:52:00 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=286828 A letter of comfort did not create a contract of guarantee under Section 126 of the Indian Contract Act, 1872 because it contained no clear undertaking by the appellant to discharge the borrower's liability on default. The document only referred to the borrower as an associate company and expressed that reasonable steps would be taken to ensure its financial and contractual obligations, which amounted to an assurance rather than a binding guarantee. Liability as guarantor or surety cannot extend beyond the express terms of the engagement. The Karnataka HC therefore held that the appellant was not liable for the borrower's debt, and the liability fastened on it was set aside. Case-Laws Indian Laws Tue, 16 Aug 2011 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=286828