Release of one co-surety does not discharge others Where there are co-sureties, a release by the creditor of one of them does not discharge the others; neither does it free the surety so released from his responsibility to the other sureties Practice area’s of B K Goyal & Co LLP Income Tax Return Filing | […]

Creditor’s forbearance to sue does not discharge surety Mere forbearance on the part of the creditor to sue the principal debtor or to enforce any other remedy against him does not, in the absenceof any provision in the guarantee to the contrary, discharge the surety.IllustrationB owes to C a debt guaranteed by A. The debt

Surety not discharged when agreement made with third person to give time to principal debto Where a contract to give time to the principal debtor is made by the creditor with a thirdperson, and not with the principal debtor, the surety is not discharged.IllustrationC, the holder of an overdue bill of exchange drawn by A

Discharge of surety when creditor compounds with, gives time to, or agrees not to sue, principal debtor A contract between the creditor and the principal debtor, by which the creditor makesa composition with, or promises to give time to, or not to sue, the principal debtor, discharges the surety,unless the surety assents to such contract.

Discharge of surety by release or discharge of principal debtor 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 principaldebtor.Illustrations(a) A gives a guarantee

Discharge of surety by variance in terms of contract Any variance, made without the surety‟s consent, in the terms of the contract between the principal  [debtor] and the creditor, discharges the surety as to transactions subsequent to the variance.Illustrations(a) A becomes surety to C for B‟s conduct as a manager in C‟s bank. Afterwards, B

Liability of two persons, primarily liable, not affected by arrangement between them that one shall be surety on other’s default Where two persons contract with a third person to undertake a certain liability, and also contract with each other that one of them shall be liable only on the default of the other, the third

Revocation of continuing guarantee by surety’s death The death of the surety operates, in the absence of any contract to the contrary, as a revocation of a continuing guarantee, so far as regards future transactions. Practice area’s of B K Goyal & Co LLP Income Tax Return Filing | Income Tax Appeal | Income Tax

Revocation of continuing guarantee A continuing guarantee may at any time be revoked by the surety, as to future transactions, by notice to the creditor.Illustrations(a) A, in consideration of B‟s discounting, at A‟s request, bills of exchange for C, guarantees to B, for twelve months, thedue payment of all such bills to the extent of

“Continuing guarantee A guarantee which extends to a series of transactions, is called a “continuing guarantee”.Illustrations(a) A, in consideration that B will employ C in collecting the rent of B‟s zamindari, promises B to be responsible, to theamount of 5,000 rupees, for the due collection and payment by C of those rents. This is a