Section 132 The Indian Contract Act, 1872
Section 132 – The Indian Contract Act, 1872
📘 Title: Surety not discharged when agreement made with third person to give time to principal debtor
🔹 Bare Act Language:
“Where a contract to give time to the principal debtor is made by the creditor with a third person, and not with the principal debtor, the surety is not discharged.”
🔍 Explanation:
This section is part of the Law of Guarantee under the Indian Contract Act. It clarifies the conditions under which a surety (guarantor) remains liable.
Key rule: If the creditor gives extra time to the principal debtor, it can sometimes discharge the surety (under Section 135).
But Section 132 creates an exception:
If the creditor makes an agreement with a third party (not the debtor) to give the debtor more time, the surety is not discharged.
✅ Example:
A is the surety for B, who owes money to C.
C makes an agreement with D (a third person), saying he will give more time to B.
Since B (the principal debtor) was not a party to that agreement, A (the surety) is still liable.
📌 Key Takeaway:
A surety remains liable unless the time extension is agreed upon with the principal debtor directly.
An agreement with a third party does not discharge the surety.
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