Question 1 OR (a)

Rights of a surety against the creditor, the principal debtor and co-sureties

10 marks

Time to write
About 20 minutes

From an older CBCS paper

Question

Question 1 OR (a) · 10 marks

Against the creditor, the debtor and a co-surety, Explain the rights of a surety.

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

20 minfor 10 marks

Read from the question

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

Write it in this order

  1. Read; underline the asks; jot your points 1 min
  2. 1 Against the principal debtor 4 marks 7 min
  3. 2 Against the creditor 3 marks 5 min
  4. 3 Against co-sureties 3 marks 5 min
  5. Check: every ask answered, key terms underlined 2 min

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

Try it first. About 20 minutes for 10 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.

Against the principal debtor.

  1. Right of subrogation (s. 140). Where a guaranteed debt has become due, or the principal debtor has defaulted, the surety, on paying or performing all he is liable for, is invested with all the rights the creditor had against the principal debtor.
  2. Right to indemnity (s. 145). every contract of guarantee carries an implied promise by the principal debtor to indemnify the surety, so the surety recovers any sum he has rightfully paid under the guarantee, though not sums he paid wrongfully.
Picture itRights of a surety against the creditor, the principal debtor and co-sureties

1Hariram pays the lender what the borrower owed—and steps into the lender's shoes.

Right of subrogationHe steps into the creditor's shoes.

2Receipt in hand, he knocks on the borrower's door to recover every rupee he paid.

Right to indemnityRecover from him any sum he has rightfully paid under the guarantee.

3Two sureties, one debt: across the table they split the burden equally.

Right to contributionThey are liable, in the absence of a contract to the contrary, to contribute equally to the whole debt or the unpaid part of it.

Against the creditor.

  1. Benefit of securities (s. 141): the surety is entitled to every security the creditor had against the principal debtor when the suretyship was entered into, whether or not he knew of it; if the creditor loses it or parts with it without his consent, he is discharged to the extent of its value.
  2. Set-off: when sued by the creditor, he may set off any claim the principal debtor has against the creditor.

Against co-sureties.

  1. Contribution (s. 146): co-sureties for the same debt, jointly or severally, under the same or different contracts, contribute equally to the whole debt or the unpaid part, in the absence of a contract to the contrary.
  2. Sureties in different sums contribute equally so far as their respective limits permit.

Where the 10 marks sit

#ComponentMarks
1Against the principal debtor4
2Against the creditor3
3Against co-sureties3
Total10
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