A puts M as apprentice to B, and gives a guarantee to B for his fidelity. B promises on his part that he will, at least once a month, see M make up the cash. B omits to see this done as promised and M embezzles. State wh

CS Executive · Economic, Business and Commercial Laws · PYQS · June 2021
A puts M as apprentice to B, and gives a guarantee to B for his fidelity. B promises on his part that he will, at least once a month, see M make up the cash. B omits to see this done as promised and M embezzles. State whether A is liable to B under the Indian Contract Act, 1872?

Answer & Explanation:

According to Section 139 of the Indian Contract Act, 1872, if the creditor does any act which is against the rights of the surety, or omits to do an act which his duty to the surety requires him to do, and the eventual remedy of the surety himself against the principal debtor is thereby impaired, the surety is discharged. A puts M as apprentice to B, and gives a guarantee to B for M's fidelity. B promises on his part that he will, at least once a month, see M make up the cash. B omits to see this done as promised, and M embezzles. In the instant case B (creditor), himself fails to fulfil his duty to check M once in a month making up cash. So, he being at fault can't held A (surety) liable for embezzlement by M (principal debtor). A (being surety) is not liable to B (being creditor) under the Indian Contract Act, 1872.

Topics: Indian Contract Act, 1872

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