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The Indian Contract Act, 1872: page 35

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    128. Surety’s liability.—The liability of the surety is co- extensive with that of the principal debtor,
unless it is otherwise provided by the contract.
                                                           Illustration
      A guarantees to B the payment of a bill of exchange by C, the acceptor. The bill is dishonoured by C. A is liable, not only
for the amount of the bill, but also for any interest and charges which may have become due on it.

   129. “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 the
amount of 5,000 rupees, for the due collection and payment by C of those rents. This is a continuing guarantee.
      (b) A guarantees payment to B, a tea-dealer, to the amount of £100, for any tea he may from time to time supply to C. B
supplies C with tea to above the value of £100, and C pays B for it. Afterwards, B supplies C with tea to the value of £200. C
fails to pay. The guarantee given by A was a continuing guarantee, and he is accordingly liable to B to the extent of £100.
     (c) A guarantees payment to B of the price of five sacks of flour to be delivered by B to C and to be paid for in a month. B
delivers five sacks to C. C pays for them. Afterwards B delivers four sacks to C, which C does riot pay for. The guarantee given
by A was not a continuing guarantee, and accordingly he is not liable for the price of the four sacks.
                                                                                      e
    130.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.
                                                                               od
                                                                       aC
                                                           Illustrations
     (a) A, in consideration of B’s discounting, at A’s request, bills of exchange for C, guarantees to B, for twelve months, the
                                                                  di
due payment of all such bills to the extent of 5,000 rupees. B discounts bills for C to the extent of 2,000 rupees. Afterwards, at the
end of three months, A revokes the guarantee. This revocation discharges A from all liability to B for any subsequent discount.
But A is liable to B for the 2,000 rupees, on default of C. In
     (b) A guarantees to B, to the extent of 10,000 rupees, that C shall pay all the bills that B shall draw upon him. B draws upon
C. C accepts the bill. A gives notice of revocation. C dishonours the bill at maturity. A is liable upon his guarantee.

    131.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.
    132. 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 person not being a party to such contract, the liability of each of such two persons to
the third person under the first contract is not affected by the existence of the second contract, although
such third person may have been aware of its existence.
                                                           Illustration
    A and B make a joint and several promissory note to C. A makes it, in fact, as surety for B, and C knows this at the time
when the note is made. The fact that A, to the knowledge of C, made the note as surety for B, is no answer to a suit by C against
A upon the note.

    133.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 1[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 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 overdrafts. B allows a customer to

1. Ins. by Act 24 of 1917, s. 2 and the first Schedule.

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