Essential features of contract of guarantee :
1. The undertaking to be given by surety under contract of guarantee must be on the request of principal debtor.
2. The primary liability is that of the principal debtor. The liability of surety is secondary. It arises only when there is a default committed by the principal debtor.
3. For a valid contract of guarantee, it is essential that the creditor must reveal all the facts related to the principal debtor, which may effect the liability of surety, clearly.
4. The contract of guarantee may be oral or written, or both.
5. If guarantee given by surety is not at the request of principal debtor, in such a case, the contract is not taken as a valid one.
6. The liability of the surety can neither be more nor less than that of the principal debtor.
7. Liability of the surety remains same when the contract between the creditor and the principal debtor is void or voidable.
8. The lunacy of the surety will discharge him of his future liability towards the guarantee given.
9. After paying/meeting all the liabilities of the principal debtor, the surety acquires all the rights of the principal debtor against the principal debtor.
10.If any changes are made in the terms of the contract by the principal creditor and his principal debtor without informing the surety, in such case, the surety is discharged of his liability.
