Gimi a sitable example from the chapter indemnity.

Dear Nitin,

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.

For eg:

You have to take a loan from bank.

Then you would be a principal debtor because you want to take loan.

The bank would be a creditor as it provides loan.

But, as we know there is a requirement of guarantee for the purpose of loan. so your father who has a account in the bank and since he has a good relation with the bank or he has high repute gives gurantee that in case u make default in payment of loan...he shall pay the same..so he becomes surerty...!

I hope you are clear.

Regards

Rahul Gupta

thanks man u rock m much clear now

 thanks joshi radhesh k