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CS Executive · Jurisprudence, Interpretation and General Laws · Contract Law

Anita guarantees to Bharat Builders the performance of Chetan's contract to build a house within a stipulated time, with Bharat Builders to supply the timber. Bharat Builders fails to supply the timber. Which is the correct position under the Act?

Anita is discharged. Under section 134 a surety is discharged by any act or omission of the creditor whose legal consequence is the discharge of the principal debtor, and failing to supply the agreed timber has that effect.

  1. AAnita remains liable because she is a surety for Chetan only
  2. BAnita is discharged, as an act or omission of the creditor has the legal consequence of discharging the principal debtorCorrect
  3. CAnita is liable but only for half the loss
  4. DAnita is discharged only if she had objected in writing

Explanation

Section 134 discharges the surety by any act or omission of the creditor whose legal consequence is discharge of the principal debtor. Illustration (c) is on these facts: the creditor's failure to supply timber discharges the surety. The option saying she remains liable ignores this.

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