Under what circumstances is the surety discharged from liability?

A surety is said to be discharged from liability when his liability comes to an end. The various modes of discharge of a surety are given below:

By revocation of contract of guarantee

By notice [Section 130] : A continuing guarantee may at any time be revoked by the surety as to future transactions by notice to the creditor. A specific guarantee may be revoked by the surety by giving a notice to the creditor if his liability has not yet accrued.

By the death of surety : A continuing guarantee is revoked by death of surety, so far as future transactions are concerned.

By novation [Section 621 : A  contract of guarantee is said to be discharged by novation when a fresh contract is entered into either between the same parties or other parties. The original contract comes to an end and the surety, is discharged under old contract.

By conduct of the creditor

By variation in the terms of contract [Section 133] : When a variation in the terms of a contract is made by the principal debtor and creditor without the consent of the surety, the surety is discharged from his liability.

By release or discharge of the principal debtor [Section 134]  : The surety is released by any contract between the principal debtor and creditor, 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.

By composition with the principal debtor [Section 135] :  Where a creditor, without the consent of the surety, makes an arrangement with the principal debtor for composition, or promises to give him time or not to sue him, the surety will be discharged.

By impairing surety’s remedy [Section 139] : The term ‘impairing’ implies damaging or diminishing the rights of the surety. If the creditor does any act which is inconsistent with the right of the surety or omits to do any act which his duty to surety requires him to do and the eventual remedy of surety himself against the principal debtor is thereby impaired, the surety is discharged.

By invalidation of the contract of guarantee

By obtaining guarantee by misrepresentation : Any guarantee which has been obtained by means of misrepresentation made by the creditor or with his knowledge and assent, concerning a material part of transaction, is invalid.

By obtaining guarantee by concealment : Any guarantee which the creditor has obtained by means of keeping silence as to material circumstances is invalid.

By the failure of the co-surety to join : Where a person gives guarantee upon a contract that the creditor shall not act upon it until the other co-surety has joined, the guarantee is not valid if the other person does not join.

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