Commercial principles of construction governing contracts of guarantee

Contracts of guarantee are governed by the settled legal doctrines and principles of interpretation that apply generally to commercial and mercantile instruments. When construing a commercial contract of suretyship, courts do not apply rigid, pedantic, or merely technical rules, but instead seek to ascertain and reflect what may fairly and reasonably be inferred to have been the true intention and understanding of the contracting parties as expressed in writing. The objective of judicial construction is to give business efficacy and full legal effect to the documented bargain rather than to defeat it. However, this rule of construction does not permit courts to travel beyond the explicit text to create a contract of guarantee where the parties have consciously refrained from undertaking personal suretyship liabilities. (UV Asset Reconstruction Company Limited Vs Electrosteel Castings Limited | 2026 INSC 14)