Section 144 The Indian Contract Act, 1872
Section 144 of the Indian Contract Act, 1872 states:
"Surety’s discharge when creditor compounds with, gives time to, or agrees not to sue principal debtor."
Where a person gives a guarantee upon a contract that the creditor shall not act upon it until another person has joined in it as co-surety, the guarantee is not valid if that other person does not join.
🔍 Explanation:
Section 144 provides that if a person agrees to become a surety on the condition that another person will also join as a co-surety, then the guarantee will be invalid if that other person does not join.
In other words:
If joining of a co-surety is a precondition for a guarantee,
And that co-surety fails to join,
Then the guarantee given by the first surety is not enforceable.
✅ Key Elements:
The intention of the surety is key — if they agreed only on the basis that someone else would also be liable, the absence of that co-surety nullifies the guarantee.
This protects sureties from unintended solo liability.
🧑⚖️ Example:
Mr. A agrees to be a surety for Mr. B’s loan, only if Mr. C also joins as a co-surety. If Mr. C does not join, then A’s guarantee is not valid and cannot be enforced by the creditor.
RELATED Blog
0 comments