Page 40 - 01. Indian Contract Act, 1872

or not.If creditor loses or parts with security without surety's consent , surety is
discharged to the extent of security's value.
(b) Right to set off: Surety can ask the creditor to set off or adjust any claim which the
debtor has against creditor.
(c) Right to share reduction: If the principal debtor becomes insolvent , surety may
claim proportionate reduction in his liability.

Against Co - Sureties.
(a) Right to contribution (Sec. 146): All the co- sureties contribute equally except in
following cases:
(1) Co- sureties may fix limits on their respective liabilities.
(2) Contract may provide co-sureties to contribute in some other proportion.

(b) Right to share benefit of securities:

Discharge of a surety
Sec. 130: By giving notice to creditor for future transactions in case of continuing
guarantee.

Sec. 131: In absence of any contract to the contrary , continuing guarantee is revoked on
death of surety.

Sec. 133: Where there is any variance in the term of contract between the principal
debtor and creditor without surety's consent, it would discharge the surety in
respect of all the transactions taking place subsequent to such variance .

Sec. 134: The surety is discharged, if the principal debtor is discharged by-
(i) a contract
(ii) any act or
(iii) any omission, the result of which is the discharge of principal debtor.

Sec. 135: If the creditor makes an arrangement with the principal debtor for composition,
for giving time or for not suing him without surety's consent.

Sec. 139: If creditor does any act or omission , there by impairing sureties eventual
remedy.

Sec. 141: If the creditor loses or parts with security without surety's consent, surety is
discharged to the extent of security's value.

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