Section 143 - Guarantee obtained by concealment invalid : Indian Contract Act
Is Guarantee obtained by concealment invalid? Section 143 of Indian Contract Act
Section 143 of Indian Contract Act 1872 : "Guarantee obtained
by concealment invalid"
143. Any guarantee which the creditor has obtained by means
of keeping silence as to material circumstances is invalid.
(a) A engages B as a clerk to collect money for him. B fails to
account for some of his receipts, and A in consequence calls
upon him to furnish security for his duly accounting. C gives
his guarantee for B's duly accounting. A does not acquaint C
with B's previous conduct. B afterwards makes default. The
guarantee is invalid.
(b) A guarantees to C payment for iron to be supplied by him
to B to the amount of 2,000 tons. B and C have privately agreed
that B should pay five rupees per ton beyond the market price,
such excess to be applied in liquidation of an old debt. This
agreement is concealed from A. A is not liable as a surety.