Under the Indian Contract Act 1872, if a surety has given a guarantee for a specific loan amount and the creditor subsequently enters into a fresh agreement with the principal debtor to vary the terms (such as increasing the rate of interest) without the surety's consent, what is the legal standing of the surety?

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Law · Indian Contract Act, 1872

Verified Solution4 OptionsUpdated: October 2026👁️1 View

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The surety is discharged entirely from all liability as to transactions subsequent to the variance.

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Answer 1

The surety remains fully liable for all obligations as the principal debtor defaulted.

Answer 2

The surety is only discharged if they can prove that the variance caused them financial loss.

Answer 3

The surety is discharged entirely from all liability as to transactions subsequent to the variance.

Answer 4

The surety remains liable for the original amount but is discharged from the additional interest.

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