Contracts Act · s 83

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s 83Revocation of continuing guarantee

A continuing guarantee may at any time be revoked by the surety, as to future transactions, by notice to the creditor.

Illustrations

(a)

A, in consideration of B’s discounting, at A’s request, bills of exchange for C, guarantees to B, for 12 months, the due payment of all such bills to the extent of $5,000.

B discounts bills for C to the extent of $2,000. Afterwards, at the end of 3 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 on default of C.

(b)

A guarantees to B, to the extent of $10,000, 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.