REVOCATION OF GUARANTEE

SUBMITTED BY SHUBHAM

(ROLLNO. 1764), B.A.LL.B (HONS.)

SUBMITTED TO Dr. VIJAY KUMAR VIMAL, TEACHER ASSOCIATE OF LAW

FINAL DRAFT SUBMITTED IN PARTIAL FULFILLMENT OF THE COURSE

CONTRACT-II FOR THE COMPLETION OF B.A.L.L.B. (HONS.) COURSE

OCTOBER, 2018

SESSION 2017-2022

CHANAKYA NATIONAL LAW UNIVERSITY

NYAYA NAGAR, MITHAPUR
PATNA
 DECLARATION PAGE

I SHUBHAM student of B.A.L.L.B. (Second year) in Chanakya National Law University

declare that the research project entitled “Revocation of guarantee” submitted by me for the
fulfilment of CONTRACT LAW II course is my own work. This project has not been
submitted for any other Degree / Certificate / Course in any Institution / University.

Name of the candidate

SHUBHAM

B.A.L.L.B (2nd Year) Signature of Candidate

ROLL NO. 1764

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 ACKNOWLEDGEMENT PAGE

I am highly elated to have worked on my research topic “Revocation of guarantee” under

the guidelines of DR. VIJAY KUMAR VIMAL, (FACULTY OF CONTRACT LAW). I
am very grateful to him for his proper guidance.

I would like to take this opportunity to express my profound gratitude and deep regard to him
for his exemplary guidance, valuable feedback and constant encouragement throughout the
duration of the project.

His valuable suggestions were of immense help throughout my project work.

His perceptive criticism kept me working to make this project in a much better way. Working
under him was an extremely knowledgeable experience for me.

I would also like to thank all my friends and my seniors. Apart from all these I would like to
give special regard to the librarian of my university who made a relevant effort regarding to
provide the materials to my topic and also assisting me.

Finally I would like to thank my parents and brother for their immense support and presence
during this whole project work.

SHUBHAM

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 CONTENTS

NAME OF CHAPTERS PAGE NUMBER.

DECLARATION…………….…………………….. ………. 1

ACKNOWLEDGEMENT………….. 2

INTRODUCTION…………………………………………………… 4-5

AIMS AND OBJECTIVE……………………………………………… 6

HYPOTHESIS ……………………………………………………… 6

SOURCE OF DATA…………………………….…………. 6

METHOD OF DATA COLLECTION……………………………… 6

2. NATURE OF CONTRACT OF GUARANTEE ……….. 7-8

3. DISCHARGE OF SURETY FROM LIABILITY ………………….. 9-14

4. JUDGEMENT AND COMMENTRIES…………………… 15-16

5.CONCLUSION ………………………..………....…………………… 17-18

BIBLIOGRAPHY………………………………….…………………… 19

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 CHAPTER I

INTRODUCTION

Nobody can really guarantee the future. The best we can do is size up the chances, calculate
the risks involved, estimate our ability to deal with them and make our plans with confidence.

A guarantee can be many a things. It can be assurance of a particular outcome or that

something will be performed in a specified manner. A guarantee is a way of assuming
responsibility for paying another’s debts or fulfilling another’s responsibilities. It can be a
promise for the execution, completion, or existence of something. A guarantee can also be a
promise or an assurance attesting to the quality or durability of a product or service.

The English law defines a ‘guarantee’ as a ‘promise to answer for the debt, default or
miscarriage of another’.

Section 126 of the Indian Contract Act, 18721 says that a ‘Contract of guarantee’, ‘surety’,
‘principal debtor’ and ‘creditor’—A ‘contract of guarantee’ is a contract to perform the
promise, or discharge the liability, of a third person in case of his default. The person who
gives the guarantee is called the ‘surety’; the person in respect of whose default the guarantee
is given is called the ‘principal debtor’, and the person to whom the guarantee is given is
called the ‘creditor’. A guarantee may be either oral or written. —A ‘contract of guarantee’ is
a contract to perform the promise, or discharge the liability, of a third person in case of his
default. The person who gives the guarantee is called the ‘surety’; the person in respect of
whose default the guarantee is given is called the ‘principal debtor’, and the person to whom
the guarantee is given is called the ‘creditor’. A guarantee may be either oral or written."

► Illustration: If A gives an undertaking stating that if ` 200 are lent to C by B and C does
not pay, A will pay back the money, it will be a contract of guarantee. Here, A is the surety,
B is the principal debtor and C is the creditor.

Surety is the person gives the guarantee, the Principal Debtor is one for whom the guarantee
is given and the creditor is the person to whom the guarantee is given. Contract Act uses the
word ‘surety’ which is same as ‘guarantor’ Prima facie, the surety is not undertaking to
perform should the principal debtor fail; the surety is undertaking to see that the principal

1
Section 126 of Indian contract act 1872

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debtor does perform his part of the bargain. A contract of guarantee pre-supposes a principal
debt or an obligation that the principal debtor has to discharge in favour of the creditor.

Anything done, or any promise made, for the benefit of the principal debtor, is deemed
sufficient consideration to the surety for giving the guarantee. It is sufficient inducement that
the person for whom the surety has given guarantee has received a benefit or the creditor has
suffered an inconvenience. While Section 2 (d) of the ICA, 1872 2 says that past consideration
is good consideration, illustration (c) of Section 127 of the ICA, 1872 seems to negate this
point. Those who favour the validity of past consideration state that law is not supposed to be
guided by illustrations. But there have been conflicting judgments about whether past
consideration is good consideration.

► Illustration: B requests A to sell and deliver to him goods on credit. A agrees to do so,
provided C will guarantee the payment of the price of the goods. C promises to guarantee the
payment in consideration of A’s promise to deliver the goods. This deemed sufficient
consideration for C’s promise.3

► Illustration: A sells and delivers goods to B. C afterwards requests A to forbear to sue B

for the debt for a year, and promises that, if he does so, C will pay for them in default of
payment by B. A agrees to forbear as requested. This is a sufficient consideration for C’s
promise.4

► Illustration: A sells and delivers goods to B. C afterwards, without consideration, agrees to

pay for them in default of B. The agreement is void.

The most basic function of a contract of guarantee is to enable a person to get a job, a loan or
some goods as the case may be. In case, a person is desirous of buying a car on a hire-
purchase agreement by making monthly payments over a period of time but the car dealer
asks for guarantee. Then someone would have to assure him that he will make the monthly
payments in case of default by the person who is buying the care. Such an undertaking results
in a contract of surety ship or guarantee. Guarantee is security in form of a right of action
against a third party called the surety or the guarantor.

2
Section 2(d) of Indian contract act, 1872
3
See illustration of section 127 of Indian contract act, 1872
4
id

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OBJECTIVES OF THE STUDY
The objectives of the study to

(i) The meaning of contract of guarantee.

(ii) The mode of discharge of surety from liability.

HYPOTHESIS
The researcher comes with the following hypothesis,

(i) Anybody (either male or female), who is competent under law can go for
Guarantee.
(ii) Once a guarantor gives the guarantee for the principal debtor, then his guarantee
can not be revoked..

RESEARCH METHODOLOGY
The researcher depend upon the existing materials like books, case laws, thus the researcher
opted doctrinal method of research. The researcher had visited library and refer the
secondary sources available there.

SOURCES OF DATA
Primary Sources – case laws, Bare act

Secondary Sources – Books on law of contract, websites, journals, articles, magazines etc.

LIMITATIONS OF THE STUDY

The researcher have time limitation as he has to complete this project within one month.

SCOPE OF THE STUDY

This research will be a source for a further researcher. This research will give him/her the
basic ideas in a very simple manner.

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 CHAPTER II

NATURE OF CONTRACT OF GUARANTEE

The contract of guarantee has to be clear. A letter clearly stating the intention to guarantee a
transaction will go on smoothly or one will behave appropriately conduct himself at work
place will suffice. But a promise to pay extra attention or to take care of it does not constitute
a guarantee.

In India, a contract of guarantee may be oral or written.5 But in England contract of gurantee
must be in writing.6 It may even be inferred from the course of conduct of the parties
concerned. Under English Law, a guarantee is defined as a promise made by one person to
another to be collaterally answerable for the debt, default or miscarriage of the third persons
and has to be in writing.

There are three parties in a contract of guarantee; the creditor, the principal debtor and the
surety. In a contract of guarantee, there are two contracts; the Principal Contract between the
principal debtor and the creditor as well as the Secondary Contract between the creditor and
the surety. The contract of the surety is not contract collateral to the contract of the principal
debtor but is an independent contract. Liability of surety is secondary and arises when
principal debtor fails to fulfil his commitments. Even an acknowledgement of debt by the
principal debtor will bind the surety.7

It is not essential that the Principal Contract must be in place/existence at the time of the
Contract of Guarantee being made. The original contract between the debtor and the creditor
may be about to come into existence. Similarly, in certain situations, a surety may be called
upon to pay though the principal debtor is not liable at all. For example, in cases where the
principal debtor is a minor, the surety will be liable though the minor will not be personally
liable.

A contract of guarantee is to be enforced according to the terms of the contract.

A guarantee is a contract of strictissima juris that means liability of surety is limited by law; a
surety is offered protection by law and is treated as a favored debtor in the eyes of the law. A

5
See section 126 of Indian contract act, 1872
6
Dr. R.K. Bangia, Contract-I, ( Allahabad ; Allahabad law agency, sixth ed., 2009), 11
7
https://kanwarn.wordpress.com/2012/03/16/indian-contract-act-1872-contract-of-guarantee-part-1-of-3/;
(visited on 12 Oct, 2016)

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contract of guarantee is not a contract ‘uberrimae fidei’ (requiring utmost good faith). Still
the suretyship relationship is one of trust and confidence and the validity of the contract
depends upon the good faith of the creditor. However, it is not a part of the creditor’s duty to
inform the surety about all his previous dealings with the principal debtor.

In WYTHES vs. LABON CHARE 1858, Lord Chelmsford held that the creditor is not bound
to inform the matters affecting the credit of the debtor or any circumstances unconnected with
the transaction in which he is about to engage which will render his position more hazardous.

Since it is based on good faith, a contract of guarantee becomes invalid if the guarantee is
obtained from the surety by misrepresentation or concealment as given in Sections 142 and
143 of the ICA8, 1872.

► Illustration: If a clerk in an office occasionally fails to account for some of the receipts for
money collected, he may be asked for surety. In case the person who steps up to be a surety
for the clerk in the office is not informed of the occasional lapses on part of the clerk which
lead to the requirement of a surety, any guarantee given by him is invalid as something of
importance and directly affecting his decision to act as a surety was concealed from him.

► Illustration: A guarantees to C payment for iron to be supplied by him to B to the amount

of 2,000 tons. B and C have privately agreed that B should pay ` five per ton beyond the
market price, such excess to be applied in liquidation of an old debt. This agreement is
concealed from A. A is not liable as a surety.

But where the surety ship is with regard to an advance to be made by a bank, the bank need
not disclose past indebtedness to the surety unless it relates to the particular transaction.

8
Section 143 and 144 of Indian contract, 1872

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 CHAPTER III

DISCHARGE OF SURETY FROM LIABILITY

When the liability of surety, which he had undertaken under a contract of guarantee, is
extinguished or comes to end, he said to be discharge from liability. The modes of discharge
of a surety, as recognise by the Indian contract act, are as under:

(i) By notice of revocation

(ii) By death of surety

(iii) By novation

(iv) By variance in terms of contract

(v) By release or discharge of principal debtor

(vi) By arrangement between principal debtor and creditor

(vii) By Creditor’s act or omission impairing sureties eventual remedy

(viii) By the loss of security

(i). By notice of revocation

According to section- 1309 “A continuing guarantee may at any time be revoked by the surety
as to future transactions by notice to the creditor.”

Thus, in such a case, the liability of the surety comes to an end in respect of future
transaction which may be entered into by the principal debtor after the surety has served the
notice of revocation. The surety shall, however, continue to remain liable for transactions
entered into prior to the notice.

Examples:

(1) A gives a loan of Rs. 1,000 to B on the guarantee of C. C cannot revoke his guarantee.10

9
Section- 130 of Indian contract act, 1872

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(2) A stands surety for any credit purchases upto Rs. 1,000 to be made by B from a shop-
keeper. After the shop-keeper has supplied goods worth Rs. 500, A gives a notice to the shop-
keeper not to sell goods to B in future. A is liable for the purchases already made. However,
he will not be liable for any purchases made after the notice of revocation.

Revocation as to future transaction is possible, when there are separate distinct transaction
contemplated in the contract. When the consideration is single and individual, for instance,
where continued relationship is established on the faith of a certain guarantee, no revocation
of the same is possible. Thus, if a servant is implied on the basis of a guarantee as to his good
conduct, the guarantee is not revocable so long as the servant continued in service.

(ii) Revocation by death (Sec. 131):

Section 13111 of Indian contract act says that “The death of the surety operates, in the absence
of any contract to contrary, as a revocation of continuing guarantee for future transactions.”
The estate of the deceased surety will not be liable for any transactions entered between the
creditor and the principal-debtor even if the creditor has no notice of death. In case the parties
have agreed to a notice of surety's death, then notice of death will be necessary. Under
English Law also, notice of surety's death is necessary.

(iii) Discharge of surety by novation (Sec. 62):

A contract of guarantee is a species of the general contract. As such, a contract of guarantee

is discharged by novation, i.e., by substituting a new contract in place of the old one. The
original contract is discharged.

(iv) By variance in terms of contract

Section-13312 says that “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.”

When the surety has undertaken liability on certain terms, it is expected that they will remain
unchanged during the whole period of guarantee13. Thus a surety is discharged from liability

10
Short notes on Revocation of Guarantee last visited http://www.preservearticles.com/2012012621541/short-
notes-on-revocation-of-guarantee.html ( 12 oct, 2016)
11
See section 131 of Indian contract act, 1872
12
See section 133 of Indian contract act, 1872

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when, without his consent, the creditor makes any change in the terms of his contract with the
principal debtor (no matter whether the variation is beneficial to the surety or is made
innocently or does not materially affect the position of the surety) because a surety is liable
only for what he has undertaken in the contract. “Surety has a right to say:14

The contract is no longer that for which I engaged to be surety; you have put an end to the
contract that I guaranteed, and my obligation, therefore, is at an end”. It is important to note
that mere knowledge and silence of the surety does not amount to an implied consent (Polak
vs Everett). Again, accepting further security for the same debt is not treated as variance in
terms of contract.

Example- A becomes surety to C for B's conduct as a manager in C's Bank. Afterwards, B
and C contract, without A's consent that B's salary shall be raised and that he shall become
liable for one-fourth of the losses on over-drafts. B allows a customer to overdraw, and the
bank loses a sum of money. A is discharged from his surety-ship by the variation made
without his consent and is not liable to make good the loss.15

It should be noted that variation discharges the surety in respect of transactions which take
place after the variation. Therefore, he continues to be liable for the transactions which were
entered before the variation took place.

(v) By release or discharge of principal-debtor (Sec. 134):

The provision concerning the discharge of the surety on the release or discharge of the
principal debtor as contained in section 13416 and its illustrations is under:

Section 13417 “A surety is discharged by any contract between the creditor and the principal-
debtor by which the principal debtor is released or by an act or omission of the creditor, the
legal consequence of which is the discharge of the principal-debtor.”

13
Discharge of Surety – Situations when liability of surety comes to an end, last visited
onhttp://accountlearning.com/discharge-of-surety-circumstances-when-liability-of-surety-comes-to-end/ 12 oct,
2016
14
Eight important circumstances under which a surety is discharged from his liability, last visited
http://www.shareyouressays.com/92169/eight-important-circumstances-under-which-a-surety-is-discharged-
from-his-liability ( 13 oct, 2016)
15
Illustration of section 133 of Indian contract act, 1872
16
Section 134 of Indian contract act, 1872
17
Id

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(a) A gives a guarantee to C for goods to be supplied by C to B. C supplies good 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 surety ship.18

(b) 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 surety ship (because the contract stands
discharged against A, the contractor).19

Exceptions:

In the following cases, the surety is not discharged:

(i) Death: Death of the principal-debtor does not discharge the surety from his liability.
(ii) Insolvency: Similarly, insolvency of the principal debtor does not discharge the surety.
(iii) Omission to sue within the period of limitation:

The omission of the creditor to sue within the period of limitation does not discharge the
surety.

Example:

B owes to C a debt guaranteed by A. The debt becomes payable. C does not sue B for more
than 3 years after the debt has become payable. Although the debt has become time-barred,
yet the surety is not discharged from his liability as surety.

(vi) By arrangement between principal debtor and creditor

Where the 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.

But in the following cases, a surety is not discharged:

18
Illustrations of section 134 of Indian contract act, 1872
19
ibid

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(a) Where a contract to give time to the principal debtor is made by the creditor with a third
person, and not with principal debtor, the surety is not discharged (Sec. 136).

Illustration (To Sec. 136):

C, the holder of an overdue bill of exchange drawn by A as surety for B and accepted by B,
contracts with M to give time to B. A is not discharged.

(b) Mere forbearance on the part of the creditor to sue the principal debtor, or to enforce any
other remedy against him, does not discharge the surety, unless otherwise agreed (Sec. 137).

Illustration (To Sec. 137):

B owes to C a debt guaranteed by A. The debt becomes payable, C does not sue B for a year
after the debt has become payable. A is not discharged from the surety ship.

(c) 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 (Sec. 138).

(vii) Creditor’s act or omission impairing sureties eventual remedy (Sec. 139):
“If the creditor does any act which is inconsistent with the rights of the surety, or omits to do
any act which his duty to the surety requires him to do, and the eventual remedy of the surety
himself against the principal debtor is thereby impaired, the surety is discharged.”

In short, it is the duty of the creditor to do every act necessary for the protection of the rights
of the surety and if he fails in this duty, the surety is discharged.

Thus, where the integrity of a cashier is guaranteed, it is the duty of the employer to give
information to the surety if any dishonest act is done by the employee.

If the employer continues to employ him after an act of dishonesty (which is proved), the
surety is discharged, if he is not informed within a reasonable time, because then the surety’s
right (eventual remedy) to inform police for necessary recovery action is lost or damaged,
i.e., may not be so fruitful as it would have been, had a report been lodged earlier.

Illustrations:
(a) B contracts to build a ship for C for a given sum, to be paid by instalments as the work
reaches certain stages, (the last instalment not to be paid before the completion of the ship).A

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becomes surety to C for B’s due performance of the contract. C, without the knowledge of A,
prepays to B the last two instalments. A is discharged by this prepayment.20

(b) A puts A/as an apprentice to B and gives a guarantee to B for A is fidelity. B promises on
his part that he will, at least once a month, see M make up the cash. B omits to see this done
as promised, and M embezzles. A is not liable to B on his guarantee.21

(viii) By loss of surety (Sec. 141):

If the creditor loses, or without the consent of the surety, parts with any security given at the
time of contract, the surety is discharged to the extent of the value of the security.

It should be noted that the surety will be discharged only when he parts with any security
given at the time of contract. He is not discharged when he parts with any security given after
the contract of guarantee is made.

Examples:

(1) A advances to B Rs. 2,000 on the guarantee of C. A also has an additional security for the
Rs. 2,000 by a mortgage of B's furniture. A cancels the mortgage, thereby returns the
furniture to B. B becomes insolvent and is unable to pay anything. C is discharged from his
liability to the extent of the value of the security (furniture).22

(2) A gives a loan to B on the security of C. Afterwards, A obtains B's scooter as a further
security. Subsequently, A gives up the further security, i.e., returns the scooter to B. In this
case, C is not discharged to the extent of the value of the security as the further security was
given after the loan had already been given.

20
Illustrations of section 139 of Indian contract act, 1872
21
id
22
Illustration of section 141 of Indian contract act, 1872

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 CHAPTER IV

JUDGEMENT AND COMMENTRIES

Yarlagadda v. Devata china yerakayya23- the bond executed by the surety limited his
liability to the tune of rs. 15000 with a stipulated that he might be liable to any amount that
might be finally decreed. It was held that the respondent had undertaken the liability only to
the tune of Rs. 15000 and the clause rendering himself liable to any amount that might be
finally decreed should be constructed as meaning not exceeding Rs. 15000.

Bank of Bihar v. Damodar Prasad24- The plaintiff bank lent money to Damodar Prasad, on
the guarantee of paras nath sinha. In spite of demands by the bank the loan was neither paid
by principle debtor nor surety. The bank then filed a suit against both the principle debtor and
surety. A decree was passed in favour of the bank but with the condition that the plaintiff
bank shall be at liberty to enforce its due against surety only. In its appeal before supreme
court the plaintiff challenged the validity of condition, the supreme court gave him the liberty
to sue jointly or any of them.

AMRIT LAL GOVERDHAN LALAN V. STATE BANK OF TRAVANCORE AND

ORS.25- Respondents 3 to 6, as partners of Respondent 2 firm (R2), entered into an
agreement with a Bank (R1) to open a cash credit account to the extent of Rs. 100,000 to be
secured by goods to be pledged with the Bank. The agreement provided that the borrowers
shall be responsible for the quantity and quality of goods pledged. The appellant (A) became
surety for the borrowers w.r.t the account upto Rs.100,000 and allowed the Bank to recover,
notwithstanding any other security the Bank may hold. The stock pledged was initially valued
at about Rs. 99,991 but after verification shortage of goods to the value of Rs. 35,690 was
found. It was alleged that R2-R6 must have taken away the goods. They were granted time to
make up the deficit but they failed to do so. After adjusting the money realized on the sale of
the goods pledged and other adjustments, a sum of Rs. 40,933.58 was found due to the Bank
from R2-R6. The Bank filed a suit against them and A. It was held that in this case there was
no variation in the terms of contracts within the meaning of section 133, and therefore surety
had not been discharged thereby.

23
A.I.R 1987 S.C. 1078
24
A.I.R. 1969 S.C. 297
25
A.I.R 1963 S.C. 746

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Charan singh v. Security finance Pvt. Ltd.26

In the above case, the creditor obtained a decree of Rs 30155 jointly against the two principle
debtor and the surety. After that the creditor entered into an agreement with one of the
principle debtor that if he paid a sum of rs 10000, the creditor will not proceed further against
him. After this, amount had been paid, the creditor sought to recover the balance from the
surety. It was held that such a compromise after the decree had been passed didn’t discharge
the surety and therefore the creditor was entitled to recover the balance of the amount from
the surety.

26
A.I.R. 1988 Delhi

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 CONCLUSION
Researcher, after going through the project found that the first hypothesis of researcher
proves right any body who is competent to contract can go for guarantee. And if the principle
debtor is failed to pay his due amount then surety will liable to pay the debt. Even the liability
of principle debtor and surety is co-extensive. Surety has right to take his money back from
principle debtor.

But the second hypothesis of researcher proves wrong. That Once a guarantor gives the
guarantee for the principal debtor, then his guarantee cannot be revoked. In future guarantee
surety may revoke his guarantee. In the cases of continuing guarantee surety may revoke his
guarantee. And there is also a ground mention in Indian contract act where surety may
discharge from his liability.

The governing principle is that if the creditor violates any rights which the surety possessed
when he entered into the surety ship, even though the damage is only nominal, the guarantee
cannot be enforced. The surety's discharge may be accomplished (1) by a variation of the
terms of the contract between the creditor and the principal debtor, or of that between the
creditor and the surety; (2) by the creditor taking a new security from the principal debtor in
lieu of the original one; (3) by the creditor discharging the principal debtor from liability; (4)
by the creditor binding himself to give time to the principal debtor for payment of the
guaranteed debt; or (5) by loss of securities received by the creditor in respect of the
guaranteed debt. The first four of these acts are collectively termed a novation. In general
whatever extinguishes the principal obligation necessarily determines that of the surety, not
only in England but elsewhere. By most civil codes the surety is discharged by conduct of the
creditor inconsistent with the surety's rights, although the rule prevailing in England,
Scotland, America and India which releases the surety from liability when the creditor
extends without the surety's consent the time for fulfilling the principal obligation, while
recognized by two existing codes civil, is rejected by the majority of them A revocation of
the contract of surety ship by act of the parties, or in certain cases by the death of the surety,
may also operate to discharge the surety.

The death of a surety does not per se determine the guarantee, but, save where from its nature
the guarantee is irrevocable by the surety himself, it can be revoked by express notice after
his death, or by the creditor becoming receiving constructive notice of the death; except
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where, under the testator's will, the executor has the option of continuing the guarantee, in
which case the executor should specifically withdraw the guarantee in order to terminate it. If
one of a number of joint and several sureties dies, the future liability of the survivors
continues, at least until it has been terminated by express notice. In such a case, however, the
estate of the deceased surety would be relieved from liability. The statute of limitations may
bars the right of action on guarantees subject to variation by statute in any U.S. state where
the guarantee is sought to be enforced.

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BIBLIOGRAPHY

BOOKS

(I) Dr. Bangia R.K, Contract-I, Allahabad ; Allahabad law agency, sixth ed., 2009
(II) Singh Avatar, contract and Specific Relief act; Eastern book company, eleventh
edition, 2013

WEBSITES

(i) http://www.shareyouressays.com/92169/eight-important-circumstances-under-which-a-
surety-is-discharged-from-his-liability

(ii) http://www.preservearticles.com/2012012621542/short-essay-on-discharge-of-surety.html

(iii) http://accountlearning.com/discharge-of-surety-circumstances-when-liability-of-surety-
comes-to-end/

(iv) http://www.preservearticles.com/2012012621539/short-essay-on-the-special-features-of-
a-contract-of-guarantee.html

BARE ACT

Indian contract act, 1872

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