Section 130 - Revocation of continuing guarantee : Indian Contract Act
What is Revocation of continuing guarantee? Section 130 of Indian Contract Act
Section 130 of Indian Contract Act 1872 : "Revocation of
130. A continuing guarantee may at any time be revoked by the
surety, as to future transactions, by notice to the creditor.
(a) A, in consideration of B's discounting, at A's request,
bills of exchange for C, guarantees to B, for twelve months, the
due payment of all such bills to the extent of 5,000 rupees. B
discounts bills for C to the extent of 2,000 rupees. Afterwards,
at the end of three months, A revokes the guarantee. This
revocation discharges A from all liability to B for any
subsequent discount. But A is liable to B for the 2,000 rupees,
on default of C.
(b) A guarantees to B, to the extent of 10,000 rupees, that C
shall pay all the bills that B shall draw upon him. B draws upon
C. C accepts the bill. A gives notice of revocation. C
dishonours the bill at maturity. A is liable upon his guarantee.