Discharge of surety by release or discharge of principal debtor
Chapter 9: Of indemnity and guarantee
The surety is discharged by any contract between the creditor and the principal debtor, by which the principal debtor is released, or by any act or omission of the creditor, the legal consequence of which is the discharge of the principal debtor.
Illustrations.
(a) A gives a guarantee to C for goods to be supplied by C to B. C supplies goods to B, and afterwards B becomes embarrassed and contracts with his creditors (including C) to assign to them his property in consideration of their releasing him from their demands. Here B is released from his debt by the contract with C, and A is discharged from his suretyship.
(b) A contracts with B to grow a crop of indigo on A‟s land and to deliver it to B at a fixed rate, and C guarantees A‟s performance of this contract. B diverts a stream of water which is necessary for the irrigation of A‟s land and thereby prevents him from raising the indigo. C is no longer liable on his guarantee.
(c) A contracts with B for a fixed price to build a house for B within a stipulated time, B supplying the necessary timber. C guarantees A‟s performance of the contract. B omits to supply the timber. C is discharged from his suretyship.
The Indian Contract Act, 1872 (Act No. 9 of 1872). From the updated text on India Code, with later amendments. Being checked against the official copy; amendment notes are not shown yet.
Related sections
- 131Revocation of continuing guarantee by surety‟s death
- 132Liability of two persons, primarily liable, not affected by arrangement between them that one shall be surety on other‟s default
- 133Discharge of surety by variance in terms of contract
- 135Discharge of surety when creditor compounds with, gives time to, or agrees not to sue, principal debtor
- 136Surety not discharged when agreement made with third person to give time to principal debtor
- 137Creditor‟s forbearance to sue does not discharge surety