Section 153 The Indian Contract Act, 1872
Section 153 – The Indian Contract Act, 1872
Title: Revocation of continuing guarantee
📜 Bare Act Language:
"A continuing guarantee may at any time be revoked by the surety, as to future transactions, by notice to the creditor."
🔍 Explanation:
Section 153 refers to continuing guarantees, which are guarantees that cover a series of transactions, not just one.
According to this section:
A surety can revoke a continuing guarantee at any time.
The revocation is effective only for future transactions, not for those already done.
This revocation must be made through a notice to the creditor.
🧠 Key Points:
Past transactions remain binding on the surety.
Revocation doesn't require the consent of the creditor — just notice.
Often used in business arrangements like running accounts or credit facilities.
⚖️ Example:
A gives a continuing guarantee to B for any goods B might supply to C.
Later, A sends a notice to B revoking the guarantee.
→ A will not be liable for goods B supplies to C after the date of notice, but remains liable for the goods supplied before that.
📚 Relevant Case Law:
Offord v. Davies (1862):
Established that a continuing guarantee can be revoked before it is acted upon.
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