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Unit 8: Contract of Guarantee




          3.   What is a ‘continuing guarantee’? When can it be revoked?                        Notes

          4.   Describe the rights of a surety against (i) co-sureties and (ii) the creditor.
          5.   Explain the circumstances under which a surety may be discharged from the liability by
               the conduct of the creditor.

          6.   S guaranteed C against the misconduct of P in an office to which P is appointed by C and
               of which the duties defined by an Act of the Legislature. By a subsequent Act, the nature

               of the office is materially altered. Afterwards misconducts himself in respect of a duty not

               affected by the latter Act. Is S liable as a surety?
          7.   Roshan  contracted to buy from Rahul  100 bales of cotton at ` 5,000 per bale for the March,
               1991 delivery. The perlormance of this contract by Rahul was guaranteed by santosh. Soon
               after Roshan contracted to sell to Rahul 10 bales of cotton of the same kind at ` 6,000 per
               bale, for the same delivery. Is Santosh discharged from his guarantee?
          8.   Ram stands as a surety for the good conduct of Ravi who is employed by a bank on a
               monthly salary of  ` 1,600. Three months after when the  financial position of the bank

               deteriorates, Ravi agrees to accept a monthly salary of ` 1,500, Two months after, it is
               discovered that Ravi  has been misappropriating cash all through . What is the liability of
               Ram?

          Answers: Self Assessment

          1.   False               2. True                 3.  False        4. True

          5.   True                6.  True

          8.9 Further Readings




           Books     G. Vijayaragavan Iyengar (2007), Introduction to Banking, Excel Books, New Delhi,
                     India.
                     M.C.Kuchhal, “Business Law”, Vikas Publishing House.

                     N.D.Kapoor, “Elements of Mercantile Law”, Sultan Chand & Sons.
                     S.S. Gulshan, Business Law, Third Edition, 2006, Excel Books, New Delhi.
                     S.S. Gulshan, Mercantile Law, Third Edition, 2006, Excel Books, New Delhi.



          Online links  http://legalservicesindia.com/article/userarticles.php?aut_id=301
                     http://www.lawyersclubindia.com/articles/IS-Contract-of-Insurance-a-contract-
                     of-indemnity--3536.asp
                     http://www.scribd.com/doc/19575522/Contract-indemnity















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