Contract of guarantee

CA Suraj Lakhotia Admin

Any variance made without the surety's consent, in the terms of the contract between the principal debtor and the creditor, discharges the surety as to transactions subsequent to the variance. The act says any variance (so whether or not favourable) Say, the interest rate is reduced because the borrower is not able to pay higher rate of interest. This could indicate that borrower has lost financial ability and the surety is not aware. So wheter beneficial or not, it discharges.

VIJAYA SARADHI MAGANTI

Generally contract of surety depends upon trust of surety on principal debtor. If the terms of the contract are changed or altered without consent/notice of surety such trust will be effected. So, law makers intended to discharge the liability of surety from the date of alteration but surety is liable for any loss incurred due to principal debtor upto date of alteration.