Section 130 The Indian Contract Act, 1872
Section 130 of the Indian Contract Act, 1872 states:
"Revocation of continuing guarantee."
A continuing guarantee may at any time be revoked by the surety, as to future transactions, by notice to the creditor.
🔍 Explanation:
This section deals with the revocation (cancellation) of a continuing guarantee. A continuing guarantee is a guarantee that applies to a series of transactions (not just one).
Under Section 130:
The surety (guarantor) can revoke their liability at any time, but only for future transactions.
Past transactions remain guaranteed — the surety remains liable for obligations arising from them.
Revocation must be made by giving notice to the creditor (the person to whom the guarantee was given).
✅ Key Points:
Applies only to continuing guarantees (Section 129 explains continuing guarantees).
Notice is essential — revocation is not effective unless the creditor is informed.
Revocation does not absolve liability for transactions already entered into.
🧑⚖️ Example:
Mr. A gives a continuing guarantee to a bank for all loans taken by Mr. B up to ₹5,00,000. After B takes a loan of ₹2,00,000, A revokes the guarantee by notifying the bank.
A is still liable for the ₹2,00,000 loan already taken.
But A is not liable for any new loans taken by B after the notice of revocation.
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