Section 244 The Indian Contract Act, 1872
Section 244 of the Indian Contract Act, 1872 states:
Section 244 – Liability of surety in case of variance in terms of contract
Where a surety has given a guarantee, if the terms of the contract between the creditor and principal debtor are varied without the surety’s consent, the surety is discharged from liability as to the transactions subsequent to the variation.
Explanation:
If the contract terms change between the creditor and the principal debtor without the surety agreeing to the change, the surety is no longer liable for any further transactions after that change.
This protects sureties from being bound by unexpected changes that increase their risk.
Key Points:
Applies only when there is a variation in contract terms.
Variation can be anything that alters the nature, extent, or duration of the original contract.
Surety’s liability continues only for transactions before the change unless consent is given.
Example:
A guarantees a loan for B with repayment in 12 months. The creditor agrees with B to extend repayment to 24 months without A’s consent. A is discharged from liability for any transactions after this change.
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