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CHAPTER
- III
CONTINUINQ GUARANTEE
until revoked.
guarantees,
the guarantee
9x
2
sum, the guarantee is a simple guarantee.
To determine
the difference bet.%feen a simple guarantee and a continuing guarantee one has to examine the nature of the
consideration.
If it is
moot question
/Mother
a general
95
4
Should be most strongly against the surety,
Chitty while dealing with continuing guarantee
5
expressed the opinion*
"It is often a difficult question
whether a guarantee, for example,
of the price of goods to be supplied,
or may be lent up to a specified
amount is tendered , to extent to a
single or definite number of transactions, or whether it is intended to
be a continuing. In the former event,
payment of the principal debtor for the
goods sold, or repayment of money lent,
brings the surety's liability to an end,
in the latter event, the surety remains
liable if further goods are supplied or
money lent up to the limit of the
guarantee".
Whether the guarantee is continuing in any
case is a question of construction, no hard and fast
rule can be laid down, and the contents of one document
affords little or no guidance to the constructions of
an-other.
can
It
is to be noted firstly that illustration (a) is apparantly not based upon any specific English case, such
as the two subsequent illustrations are. Again in S.N.
9
Sen V. The Bank of Bengal, it has been observed that
there is hardly any modern case in which guarantee has
been held to be continuing one, which depends upon a
main contract of employment between a master and a servant
in the nature of a surety for the servant's
fidelity.
9?
worth of
goods from the creditor and paid for them and then
bought other goods of him in excess of that amount, the
93
generally be under-
Thus if you
will let the bearer have what leather he wants and charge
the same himself,
We must
93
business the relative position of the parties and
12
surrounding circumstances.
In Sankaranaeayna v.
13
Paramasivan, it has been held that there is no analogy
between a security executed by a surety under section
55(4) C.P.C, and a continuing guarantee as defined in
section 129 of the Contract Act,
10.
in;
tiroes hereafter" was guaranteed,
It is true, that
But these
IOJ
It is
they are
HIS'
For where a
tion.
A
Of all
Whilst ne conti-
H]->
Disputes fre-
103
or
lOJ
In
lu;
making advances after receiving
notice from the guarantor that
he would not be further liable*.
In
10.
have been many cases in English courts in which a
surity has been allowed to withdraw, where the
guarantee has been found to be a continuing.
But
simply by notice to the creditor withdraw the guarantee to nullify altogether the effect of the
security.
10
A surety in
11.J
n
In cases where the continuii^g guarantee
relates* for instance, to a current account in a bank*
or a current account relating to goods sold in a
business, the guarantee may be withdrawn at any time ,
as to future transactions by notice to the creditor.
The right of revocation may be limited by
express stipulation.
the
A mere denial
1]
32
putting an end to a legal contract of guarantee,
33
In Dhamoomal Farsasen v. Kuppuraj, it has been
held that the Indian Contract Act has left it open
to the parties to provide as to
bonds required by the courts aire concerned, the revocation should always came into effect only for subsequent appearances when the prit^cipal debtor first has
been produced before the court.
But such
11 u
surety is to
money
1 ] :
The surety
n
la given once for all, just as in the case of granting
of a lease in which a third party guarantees the
payment of the rent and performance of the conditions.
If the surety was at liberty to say, " I withdraw
the guarantee", than the guarantee would have been
utterly futile and idle.
A similar question was before privy council in
40
S,N. Sen V. Bank Qf Bengal, in this case the principal
was appointed to a office of trust and a contract of
guarantee was entered xnto for securing an appointment
of principal in a bank.
no series of transactions.
It would put
him
Even where
] 1 J
41
In Kaparthala Estate v, Sheo Shankar/ under
a security bond, the surety made himself liable to
thp extent of one year's rent on default by the
principal debtor during the period of the lease. The
principal died in the course of the lease. The surety
did not give notice to the landlord revoking his
guarantee.
In each case,
If from the
I'J?
There is
One is
certain notice.
n
to the death of the surety.
In protection of
its own interest, the creditor should not allow termination on the part
11
L, J
REFERENCES
1.
Appendix
2.
3.
4.
5.
6.
7.
8.
9.
Ibid.
Supra note 3
A.I.R. 1920 P.C. 35
21
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
1225.
26.
27.
28.
29.
Supra Note 2
30.
31.
Appendix I ii*j.
32.
33.
34,
35,
Supra Note 2
36,
37,
38,
39.
40.
41.
325
42.
43.
Supra Note 27
287