Section 159 The Indian Contract Act, 1872
Section 159 of the Indian Contract Act, 1872 states:
Section 159 – Revocation of continuing guarantee by surety’s death
A continuing guarantee may, at any time, be revoked by the surety, as to future transactions, by notice to the creditor. But in the case of the death of the surety, the continuing guarantee is revoked as to future transactions, unless there is a contract to the contrary.
Explanation:
A surety’s death automatically revokes a continuing guarantee for future dealings, unless the agreement says otherwise.
However, the surety’s estate remains liable for transactions made before death.
Key Points:
Applies only to continuing guarantees (see Section 129).
No need for explicit notice of revocation upon death.
If a contract specifically provides that the guarantee continues even after death, then it remains valid.
Illustration:
A guarantees B for any goods sold on credit to C over a year. A dies after 6 months. B supplies goods to C in the 8th month. Since A is dead and there’s no contract saying the guarantee continues after death, A’s estate is not liable for the goods supplied after death.
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