CS Executive · Jurisprudence, Interpretation and General Laws · Contract Law
Neha guarantees repayment of a Rs 5,000 loan that Prakash will take from Qureshi on 1 March. Without Neha's consent, Qureshi pays Prakash the Rs 5,000 on 1 January. What is the effect on Neha's liability?
Neha is discharged. Under section 133, any variance in the terms between principal debtor and creditor made without the surety's consent discharges the surety, and advancing the loan on 1 January instead of 1 March is such a variance.
- AShe stays liable because the amount lent is unchanged
- BShe is discharged, as the contract has been varied without her consentCorrect
- CShe is liable only for interest from 1 January
- DShe is liable only if Prakash defaults after 1 March
Explanation
Section 133 discharges the surety as to transactions after a variance made without her consent in the terms between debtor and creditor. Illustration (e) shows early payment is such a variance, as the creditor could sue for the money before 1 March. Hence Neha is discharged.
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