Indian Contract Act,1872

Act No : 9

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Section : "Continuing guarantee"

129."Continuing guarantee".-A guarantee which extends to a seriesseries of transactions is called a "continuing guarantee". Illustrations (a) A, in consideration that B will employ C in collecting therent of B's zamindari, promises B to be responsible, to the amount of5,000 rupees, for the due collection and payment by C of those rents.This is a continuing guarantee. (b) A guarantees payment to B, a tea-dealer, to the amount ofpound 100, for any tea he may from time to time supply to C. Bsupplies C with tea to above the value of pound 100, and C pays B forit. Afterwards B supplies C with tea to the value of pound 200. Cfails to pay. The guarantee given by A was a continuing guarantee,and he is accordingly liable to B to the extent of pound 100.51 (c) A guarantees payment to B of the price of five sacks offlour to be delivered by B to C and to be paid for in a month. Bdelivers five sacks to C. C pays for them. Afterwards B delivers foursacks to C, which C does riot pay for. The guarantee given by A wasnot a continuing guarantee, and accordingly he is not liable for theprice of the four sacks.

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