Liability of Surety

TANMOY MUKHERJI INSTITUTE OF JURIDICAL SCIENCE

Dr. Tanmoy Mukherji

Advocate

Liability of Surety-

Tanmoy Mukherji

Advocate

Surety’s liability = Principal debtor’s liability (co-extensive)

According to Sec. 126 of the Indian Contract Act, 1872, a contract of guarantee is a contract to perform the promise or discharge the liability of a third person in case of his default.

Parties Involved-

The surety undertakes responsibility if the debtor fails.

Nature of Liability of Surety-

Sec. 128 states that the liability of the surety is co-extensive with that of the principal debtor, unless it is otherwise provided by the contract.

→Unless contract provides otherwise.

Flow Chart-

Key Features of Surety's Liability-

5. Liability may be limited-

Total debt = Rs. 5,00,000

Surety liability = Rs. 1,00,000 (Limited).

Reference Case of co-extensive:

Case Reference for Direct Liability-