Yes, a guarantor can be legally required to repay a borrower's loan if the borrower fails to meet the repayment obligations. Under Indian law, a guarantor's liability generally arises when the borrower defaults, subject to the terms of the guarantee agreement.
Key points:
- Guarantor's liability: By signing a guarantee agreement, the guarantor promises to repay the loan if the borrower fails to do so.
- Co-extensive liability: Under the Indian Contract Act, 1872, the liability of the guarantor is generally co-extensive with that of the borrower, unless the contract provides otherwise.
- Recovery by the lender: If the borrower defaults, the lender may initiate recovery proceedings against the guarantor in accordance with the loan agreement and applicable law.
