SURETY’S Liability by Kalyani
Surety’s liability is defined under section 128 of Indian Contract Act. Section 128 of Indian Contract Act says that surety’s liability is co-extensive with that of principal debtor when not stated in contract.
Illustration- A takes guarantees B that C will pay for the goods given by B in a specific period of time. But C fails to pay the bill and so A becomes liable to pay the bill of B . and A is also liable to pay any interest if was given in the contract.
Extent of surety’s liability: surety has a right to put limitations of his payment if principal debtor fails to perform his duty while entering into contract. Suppose surety can put limit of 10,000 Rs and not above it during contract.
NOTE: In absence of such contract, his liability is co-extensive with that of the principal debtor.
Illustration: in Hobson v Bass (1871) the surety expressly declared that “my liability under this guarantee shall not at any time exceed the sum of £250“.