Contracts Act · 2023 Revised Edition · Part · Indemnity and Guarantee
92. Discharge of surety by creditor’s act or omission impairing surety’s eventual remedy
Official textFrom Attorney General's Chambers, unchanged
If the creditor does any act which is inconsistent with the rights of the surety, or omits to do any act which his duty to the surety requires him to do, and the eventual remedy of the surety or omission himself against the principal debtor is thereby impaired, the surety is discharged.
surety
“surety” means a person referred to as a surety, or as a guarantor, or by any other corresponding term, in a scholarship agreement.
Illustrations
B contracts to build a ship for C for a given sum, to be paid by instalments as the work reaches certain stages. A becomes surety to C for B’s due performance of the contract.
C, without the knowledge of A, prepays to B the last two instalments. A is discharged by this payment.
C lends money to B on the security of a joint and several promissory note made in
C’s favour by B, and by A as surety for B, together with a bill of sale of B’s furniture, which gives power to C to sell the furniture and apply the proceeds in discharge of the note.
Subsequently, C sells the furniture but, owing to his misconduct and wilful negligence, only a small price is realised. A is discharged from liability on the note.
A puts M as apprentice to B, and gives a guarantee to B for M’s fidelity. B promises on his part that he will, at least once a month, see M make up the cash. B omits to see this done as promised, and M embezzles. A is not liable to B on his guarantee.
Terms defined in s 100B
surety
Defined · s 100B“surety” means a person referred to as a surety, or as a guarantor, or by any other corresponding term, in a scholarship agreement.
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