Question 2 OR (a)

The surety's liability is co-extensive with the principal debtor's

6 marks

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

Question

Question 2 OR (a) · 6 marks

(OR)

  1. “The Liability of a Surety is co-extensive with the liability of the Principal Debtor”. Comment.

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

  • CommentA statement to judge: take a stand on it in your first line, and come back to it at the end.

Write it in this order

  1. Read; underline the asks; jot your points 1 min
  2. 1 Section 128 and its illustration 2 marks 3 min
  3. 2 Secondary liability; creditor may proceed against the surety first; defect in the document 3 marks 5 min
  4. 3 Qualification by contract; conclusion 1 mark 2 min
  5. Check: every ask answered, key terms underlined 1 min

Short on time? Trim steps 1 and 2 evenly rather than skip one: each is capped at its own marks. End with step 3 in a line or two.

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.

The rule. Under section 128 of the Indian Contract Act, 1872, a surety is liable to the same extent as the principal debtor (his liability is co-extensive with the debtor's), unless the contract provides otherwise.

Meaning:

  • The surety is liable for the whole of what the principal debtor owes, no more and no less: on the illustration to section 128, a surety for a bill of exchange is liable for the amount of the bill and also for the interest and charges that have become due on it.
  • His liability is secondary in nature: he is liable only on the principal debtor's default.
  • A creditor may choose to proceed against the surety first, unless there is an agreement to the contrary.
  • Where the debtor cannot be held liable because of a defect in the document, the surety's liability also ceases.

Qualifications. The rule applies "unless it is otherwise provided by the contract": the surety may limit his liability, for instance to a fixed sum, and he is then liable only to that extent.

Conclusion. The statement is correct: a surety answers for the very debt of the principal debtor, to the same extent, subject to any limit fixed by the contract of guarantee.

Where the 6 marks sit

#ComponentMarks
1Section 128 and its illustration2
2Secondary liability; creditor may proceed against the surety first; defect in the document3
3Qualification by contract; conclusion1
Total6
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