Question

Identify which of the following statement is true and which is false?
P. A surety is favoured creditor.
Q. The liability of the principal debtor is co-extensive with that of surety unless the contract otherwise provides.
Select the correct answer from the options given below -

P Q

• A. True False
• B. False False
• C. True True
• D. False True

Answer 1

Answer: (D)

False True

Sector 133 states "Discharge of surety by variance in terms of contract.—Any variance, made without the surety’s consent, in the terms of the contract between the principal and the creditor, discharges the surety as to transactions subsequent to the variance and Section 126 talks about ‘Contract of guarantee’, ‘surety’, ‘principal debtor’ and ‘creditor’—A ‘contract of guarantee’ is a contract to perform the promise, or discharge the liability, of a third person in case of his default. The person who gives the guarantee is called the ‘surety’; the person in respect of whose default the guarantee is given is called the ‘principal debtor’, and the person to whom the guarantee is given is called the ‘creditor’.