Any guarantee which the creditor has obtained by means of keeping silence as to material circumstances, is invalid.
Illustrations
(a) A engages B as clerk to collect money for him. B fails to account for some of his receipts, and A in consequence calls upon him to furnish security for his duly accounting. C gives his guarantee for B's duly accounting. A does not acquaint C with B's previous conduct. B afterwards makes default. The guarantee is invalid.
(b) A guarantees to C payment for iron to be supplied by him to B to the amount of 2,000 tons. B and C have privately agreed that B should pay five rupees per ton beyond the market price, such excess to be applied in liquidation of an old debt. This agreement is concealed from A. A is not liable as a surety.
Illustrations
(a) A engages B as clerk to collect money for him. B fails to account for some of his receipts, and A in consequence calls upon him to furnish security for his duly accounting. C gives his guarantee for B's duly accounting. A does not acquaint C with B's previous conduct. B afterwards makes default. The guarantee is invalid.
(b) A guarantees to C payment for iron to be supplied by him to B to the amount of 2,000 tons. B and C have privately agreed that B should pay five rupees per ton beyond the market price, such excess to be applied in liquidation of an old debt. This agreement is concealed from A. A is not liable as a surety.
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Next · Section 144Guarantee on contract that creditor shall not act on it until co-surety joins. →All sections / सभी धाराएँThe Indian Contract Act, 1872 →
More sections of this act
Section 1 · Short title.Section 2 · Interpretation-clause.Section 3 · Communication, acceptance and revocation of proposals.Section 4 · Communication when complete.Section 5 · Revocation of proposals and acceptances.Section 6 · Revocation how made.Section 7 · Acceptance must be absolute.Section 8 · Acceptance by performing conditions, or receiving consideration.India Code, Government of India. Text fetched 09 Oct 2026. Check the linked official text and subsequent notifications when applying a provision.