CS Executive · Jurisprudence, Interpretation and General Laws · Contract Law
Kiran guarantees Lakshmi Finance for a loan to Mohan, on the contract that the creditor shall not act on the guarantee until Naveen has joined as co-surety. Naveen never joins, and the creditor then sues Kiran on the guarantee. What is the position?
The guarantee is not valid. Under section 144, where a guarantee is given on the contract that the creditor will not act on it until another person joins as co-surety, it fails if that person does not join, so Kiran is not liable.
- AKiran is liable for the full amount, as the condition is only a formality
- BKiran is liable only for half the amount
- CThe guarantee is not valid, because the other person did not join as co-suretyCorrect
- DThe guarantee is valid but Kiran may demand Naveen's later consent
Explanation
Section 144 says that where a guarantee is given on the contract that the creditor shall not act upon it until another person has joined as co-surety, the guarantee is not valid if that other person does not join. The condition is part of the contract, so it is not a formality. Proportionate liability is not provided by the section.
Did you get it right without looking?
One question tells you little. A timed set on Contract Law shows your real accuracy, how long you take and where you lose marks.
More Contract Law questions
- Sunita is told by Kapoor that a factory yields 500 units a year, though he honestly believes this to be true and it is false. Before buying,…
- Which statement about the illustration to Section 21 of the Indian Contract Act, 1872 is correct?
- Deepak, a contractor, executes a bond under the orders of a State Government, binding himself to pay Rs. 2 lakh if he breaches a condition o…
- Which of the following is a ground stated in Section 11 on which a person may be incompetent to contract?
- Harish, for natural love and affection, signs a written promise to give Rs. 2,00,000 to his brother Girish, but the document is not register…
- Ravi, aged 17 years, and Meera, an adult, sign an agreement for sale of her scooter to him. Under the Act, the age of majority for Section 1…