Indian Contract Act,1872

Act No : 9

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Section : Guarantee obtained by concealment invalid

143. Guarantee obtained by concealment invalid.-Any guaranteewhich the creditor has obtained by means of keeping silence as tomaterial circumstances is invalid. Illustrations (a)A engages B as clerk to collect money for him. B fails toaccount for some of his receipts, and A in consequence calls upon himto furnish security for his duly accounting. C gives his guaranteefor B's duly accounting. A does not acquaint C with B's previousconduct. B afterwards makes default. The guarantee is invalid. (b)A guarantees to C payment for iron to be supplied by him to Bto the amount of 2,000 tons. B and C have privately agreed that Bshould pay five rupees per ton beyond the market price, such excess tobe applied in liquidation of an old debt. This agreement is concealedfrom A. A is not liable as a surety.55

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