- A tripartite (tri-party) contract:
Under the contract of guarantee, there must be the three parties. Principal Debtor, Surety and Creditor are party of contract of guarantee. There should be three different agreements between three parties.
- No direct Consideration between Surety and Creditor:
- Primary liability lies upon the principal debtor and surety seems to be secondary or conditional liability.
- Competency of parties is must essential along with other essential elements of a valid contract.
- Liability of Surety arises after the defaults of the principle debtor.
- It must be concluded in written form.
- Consent all of three parties is essential.
- The contract of guarantee may be express or implied etc.
Besides that, being special types of contract, it must satisfy all the essential elements of valid contract such as offer and acceptance, lawful objective, consideration, free consent, contractual capacity etc.