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negotiable instrument

negotiable instrument

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Publicado porMomna Amjad

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Published by: Momna Amjad on Apr 30, 2011
Direitos Autorais:Attribution Non-commercial

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09/17/2012

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A continuing guarantee may be revoked as regards future
transactions under the following circumstances:

1.

By notice of revocation by the surety- Section 130
provides that “a continuing guarantee may, at any time, be revoked by
the surety, as to future transactions, by notice to the creditor”. Thus the
surety, may terminate his continuing guarantee as regards transactions
entered into after the notice. He continues to be liable for transactions
entered into prior to the notice.

Illustration- A, in consideration of B’s discounting, at A’s request,
bill of exchange for C, guarantees to B, for twelve months, the due
payment of all such bills to the extent of Rs. 5,000. B discounts bills for
C to the extent of Rs. 2,000. Afterwards, at the end of three months A
revokes the guarantee. This revocation discharges A from all liabilities to

186

B for any subsequent discounting of bills. But A is liable to B for Rs.
2,000, on default of C.

2.

By death of surety- Section 131 lays down that “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”. Accordingly, a continuing guarantee is also terminated by
the death of the surety so far as regards future transactions unless there
is a contract to the contrary. It is not necessary that the creditor must
have notice of the death. The estate of the surety is free after death,
although the creditor might have entered into a transaction without
knowledge of the death of the surety.

3.

In the same manner as the surety is discharged- A
continuing guarantee is also revoked under the same circumstances
under which a surety’s liability is discharged, that is:
(a) By variance in terms of contract (Section 133).
(b) By release or discharge of principal debtor (Section 134).
(c) By arrangement with principal debtor (Section 135).
(d) By creditor’s act or omission impairing surety’s eventual
remedy (Section 139).
(e) By loss of security (Section 143).

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