Q.12 Describe the discharge of surety.
Ans: DISCHARGE OF SURETY
A surety is said to be discharged when his liability as surety comes to an end.
MODES OF DISCHARGE OF SURETY
1. BY REVOCM TION OF CONTRACT OF GUARANTEE
(a) BY NOTICE [SECTION 130]
A specific guarantee may be revoke by a surety by notice to the creditor of the liability of the surety has not yet accrued. A continuing guarantee may at any time be revoke by the surety as to future transactions by notice to the creditor. However the surety remains liable for the v transaction, which have already taken place.
(b) BY THE DEATH OF SURETY [SECTION 131]
In the absence of any contract to the contrary, the death of a surety operates as a revocation of a continuing guarantee as to future transactions taking place after the death of surety.
However, the deceased surety’s estate remains liable for the past transaction which have already taken place before the death of the surety but will not be liable for the transactions taking place after the death of surety but will not be liable for the transaction taking places after the death of surety even if the creditor has no notice of surety’s death.
(c) BY NOVATION [SECTION 62]
A contract of guarantee is said to be discharged by Novation when a fresh contract is entered into either between the same parties or between other parties, the consideration being the mutual discharged of the old contract. The original contract of guarantee comes to an end and the surety under original contract is discharged.
2. BY CONDUCT OF CREDITOR
(a) BY VARIANCE IN TERMS OF CONTRACT (SECTION 133]
Any variance, made without the surety’s consent in the terms of the contract between the principal debtor and the creditor discharged the surety as to transaction subsequent to the variance.
A become surety to C for B’s conduct as manager in C s bank. After wards B and C contract, without A s consent, that B’s salary shall be raised and that he shall become liable for one-forth of the losses on overdrafts. B allows a customer to overdraw, and the bank loses a sum of money. A is discharged from his customer to overdraw and the bank loses a sum of money. A is discharged from his surety ship by the various made with out his consent and is not liable to make good this loss.
(b) BY RELEASE OR DISCHARGE OF PRINCIPAL DEBTOR [SECTION 134]
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 discharged of the principal debtor.
A contract with B for a fixed price to build a house for A within a stipulated time, B supplying the necessary timber, C guarantee As performance of the contract. B omits to supply the timber. C is discharged from his surety ship.
(c) BY ARRANGEMENT
A contract between the creditor and principal debtor by which the creditor makes a composition with or promises to give time to, or not to sue the principal debtor, discharged the surety unless the surety assents to such contract,
CASES WHERE SURETY IS NOT DISCHARGED
(i) Where a contract is give time to the principal debtor is made by the creditor with a third person, and not with the principal debtor, the surety is not discharged.
C, the holder of an overdue bill of exchange drawn by A as surety for B, and accepted by B, contract with M to give more time to B. A is not discharged.
(ii) More forbearance on the part of the creditor to sue the principal debtor or to enforce nay other remedy against him, does not, in the absence of any provision in the guarantee to the contrary, discharge the surety.
(d) BY CREDITOR’S ACT OR OMISSION [MPARING SURETY’S EVENTUAL REMEDY [SECTION 139]
If a creditor does any act, which is inconsistent with the rights of the surety, or omits to do an act which is his duty to the surety required him to do, and the eventual remedy of the surety himself against the principal debtor is thereby impaired, the surety is discharged.
B contracts to build a ship for C for a given sum, to be installments as the work reaches certain stages. A becomes surety to C for B’s performance of the contract by this prepayment.
(e) LOSS OF SECURITY [SECTION 141]
If the creditor loses, or without the consent of the surety, part with security given to him, the surety is discharged from liability to the extent of security.
A gave a loan to B on the guarantee of C as well as on the mortgage of B’s furniture. Afterwards, A cancels the mortgage. B becomes insolvent and A sues C on this guarantee. C is discharged to the liability to the value of furniture.
III. BY INVALIDATION OF CONTRACT
(a) GUARANTEE OBTAINED BY MISREPRESENTATION [SECTION 142]
Any guarantee, which has been obtained by means of misrepresentation made by a creditor or with his knowledge and assent, concerning a material part of the transaction, is invalid.
(b) GUARANTEE OBTAINED BY CONCEALMENT [SECTION 143]
Any guarantee, which a creditor has obtained by means of keeping silence to material circumstances, is invalid.
X employs Y as s clerk to collect money for him. Y faiis account for some of his receipts and X, in consequence calls upon Z to furnish security for his duly accounting Z gives guarantee for Ys duly account. X does not inform Z about Ys previous conduct. Y, after wards makes default. Z is not liable because the guarantee was obtained by concealment of fact.
(c) FAILURE OF CO-SURETY TO JOIN A SURETY [SECTION 144]
Where a person gives a guarantee upon a contract that a creditor shall not act upon it until another person has joined in it as co-surety, the guarantee is not valid if that person does not join. Against universal pressure, which may one day be too heavy for? http://buyessayonline.ninja/