Section 563: Contract of guarantee deemed to be made

1) If a contract is concluded under which a third party undertakes to repay the loan borrowed by or discharge the liability promised by a person in case of that person’s default, a contract of guarantee shall be deemed to be concluded.

2) If a third party gives the guarantee pursuant to sub-section (1) and the person bound to repay the loan or discharge the liability fails to repay or discharge such loan or liability, the person giving the guarantee (the surety) to such loan or liability shall repay the loan or discharge the liability according to the terms and conditions of the contract.

3) The terms and conditions of the guarantee shall be as determined in the contract.

4) A contract of guarantee shall be made in written form.