‘Sooraj’ guarantees ‘Vikas ’ for the transactions to be done between ‘Vikas’ & ‘Nikhil ’ during the month of March, 2023. ‘Vikas ’ supplied…

According to section 131 of Indian Contract Act,1872, in the absence of a contract to contrary, a continuing guarantee is revoked by the death of the surety as to the future transactions. The estate of deceased surety, however, liable for those transactions which had already taken place during the lifetime of deceased. Surety’s estate will not be liable for the transactions taken place after the death of surety even if the creditor had no knowledge of surety’s death. In this question, ‘Sooraj’ was surety for the transactions to be done between ‘Vikas’ & ‘Nikhil’ during the month of March, 2023. ‘Vikas’ supplied goods of 30,000,20,000 and of 40,000 on 01.03.2023,03.03.2023 and10.03.02023 respectively. ‘Sooraj’ died in a road accident, but this was not in the knowledge of ‘Vikas’. When ‘Nikhil’ defaulted on payment, ‘Vikas’ filed suit against legal heirs of ‘Sooraj’ for recovery of full amount i.e.90,000. On the basis of above, it can be said in case of death of surety (‘Sooraj’), his legal heirs are liable only for those transactions which were entered before05.03.2023 i.e. for 50,000. They are not liable for the transaction done on 10.03.2023 even though Vikas had no knowledge of death of Sooraj. Further, if the worth of the estate of deceased is only - 45,000, the legal heirs are liable for this amount only.