Section 184 The Indian Contract Act, 1872
Section 184 of the Indian Contract Act, 1872 states:
Section 184 – Guarantee when revoked
A guarantee may be revoked at any time by the surety, as to future transactions, by giving notice to the creditor. But the surety is liable for all transactions that took place before the notice was received by the creditor.
Explanation:
The surety (guarantor) can revoke a guarantee for any future dealings by notifying the creditor.
The revocation does not affect transactions or liabilities that arose before the creditor received the notice.
Until the creditor gets the notice, the surety remains liable.
Key Points:
Only future transactions are affected by revocation.
The notice must be communicated to the creditor to be effective.
Protects surety from indefinite liability, but protects creditor’s rights for prior dealings.
Example:
A guarantees loans taken by B from C. A sends a notice to C revoking the guarantee on June 1. Any loans given by C to B before June 1 are covered by A’s guarantee, but loans after June 1 are not.
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