Guarantee Contracts

Corporate & Other Laws

In the first image below, it is explained that a surety can be sued even when the principal debtor has been omitted from being sued... And in the second image they say that surety is only liable in case of default in payment by the principal debtor... So there are contradictory statements in the module which I am unable to understand properly. P.S. : Both these statements are in the ICAI module, respectively on the page number 1.12 and 1.13.

Aditya Mishra

CA Final

★ 2K+

09-Oct-21 16:26

573

Answers (3)

There is a mistake in uploading images... Therefore... For the purpose of this doubt only, "first image" should be construed as "second image" and the "second image" should be construed as "first image". Thank you :)

Thread Starter

Aditya Mishra

CA Final

★ 2K+

09-Oct-21 16:32

They are not contradictory. 1. Surety is only liable in case of default in payment by the principal debtor. It means liability of surety arises when debtor defaults. So, creditor should have demanded from debtor and debtor or refused or simply on due date debtor did not pay. 2. Surety can be sued even when the principal debtor has been omitted from being sued. Now, when debtor defaults, creditor has a right against both debtor and surety. This line says, creditor can directly sue surety - creditor may omit suing debtor. But creditor can sue only when default happens. Hope it is clear.

Sahibdeep Singh

CA Inter

★ 14K+

10-Oct-21 20:21

Ooh... Got it... Thank you so much sir :)

Thread Starter

Aditya Mishra

CA Final

★ 2K+

11-Oct-21 14:15