Contracts Act · s 87

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87.
Discharge of surety by release or discharge of principal debtor
The surety is discharged by any contract between the creditor and the principal debtor by which the principal debtor is released or by any act or omission of the creditor, the legal consequence of which is the discharge of the principal debtor.
Illustrations
(a)
A gives a guarantee to C for goods to be supplied by C to B. C supplies goods to B and afterwards B becomes embarrassed and contracts with his creditors (including C) to

Contracts 58
assign to them his property in consideration of their releasing him from their demands. Here,
B is released from his debt by the contract with C and A is discharged from his suretyship.
(b)
A contracts with B to grow a crop of indigo on A’s land and to deliver it to B at a fixed rate and C guarantees A’s performance for this contract. B diverts a stream of water which is necessary for irrigation of A’s land and thereby prevents him from raising the indigo. C is no longer liable on his guarantee.
(c)
A contracts with B for a fixed price to build a house for B within a stipulated time, B supplying the necessary timber. C guarantees A’s performance of the contract. B omits to supply the timber. C is discharged from his suretyship.

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s 87Discharge of surety by release or discharge of principal debtor

The surety is discharged by any contract between the creditor and the principal debtor by which the principal debtor is released or by any act or omission of the creditor, the legal consequence of which is the discharge of the principal debtor.

Illustrations

(a)

A gives a guarantee to C for goods to be supplied by C to B. C supplies goods to B and afterwards B becomes embarrassed and contracts with his creditors (including C) to

Contracts 58

assign to them his property in consideration of their releasing him from their demands. Here,

B is released from his debt by the contract with C and A is discharged from his suretyship.

(b)

A contracts with B to grow a crop of indigo on A’s land and to deliver it to B at a fixed rate and C guarantees A’s performance for this contract. B diverts a stream of water which is necessary for irrigation of A’s land and thereby prevents him from raising the indigo. C is no longer liable on his guarantee.

(c)

A contracts with B for a fixed price to build a house for B within a stipulated time, B supplying the necessary timber. C guarantees A’s performance of the contract. B omits to supply the timber. C is discharged from his suretyship.