Question 2 (b)

Nature and extent of a surety's liability

6 marks

Time to write: About 12 minutes
Topic: Indemnity and guarantee
Notes: Crux notes

Question

Question 2 (b) · 6 marks

In a contract of guarantee, explain the nature and extent of the surety's liability.

Reworded from the university paper; the task is the same. The original paper belongs to the University of Delhi. See DU's question bank.

Before you write

Read off the question and its marks

12 minfor 6 marks

Read from the question

ExplainEach point stated, then explained in a line or two.

Write it in this order

Read; underline the asks; jot your points 1 min
1 Nature: co-extensive, secondary but directly enforceable 2½ marks 4 min
2 Extent, with the illustration 2 marks 3 min
3 Limits 1½ marks 3 min
Check: every ask answered, key terms underlined 1 min

123

Short on time? Trim steps 1–3 evenly rather than skip one: each is capped at its own marks.

Try it first. About 12 minutes for 6 marks. Write it out, then open the solution.

Solution

Hover or tap a marked figure, like 72,000, to see how it is made and where else it appears.

Nature of the liability. In a contract of guarantee the surety promises to discharge the liability of the principal debtor in case of his default. Section 128 of the Indian Contract Act, 1872 provides that the surety's liability is co-extensive with the principal debtor's, unless it is otherwise provided by the contract. The surety's liability is secondary in the sense that it arises on the principal debtor's default; but once the debt is due and unpaid, the creditor may proceed against the surety directly, without first suing the principal debtor or exhausting his remedies against him.

Extent of the liability. The surety is liable to the same extent as the principal debtor: for the principal sum and also for interest and other charges for which the principal debtor is liable. Illustration to section 128: “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” due on it.

Limits.

The surety may limit his liability by the contract, for instance to a fixed sum; he is then liable only up to that sum.
His liability is never greater than the principal debtor's.
A surety is discharged by variation of the terms without his consent, release of the principal debtor, or the creditor's act impairing his remedy.

Where the 6 marks sit

#	Component	Marks
1	Nature: co-extensive, secondary but directly enforceable	2.5
2	Extent, with the illustration	2
3	Limits	1.5
	Total	6

Keyboard: ← → previous and next question, / search

Report a problemopens an email to admin@getkunji.com with the question ID850-Q2balready filled in.