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Section 143, Contract Act 1872: Guarantee Obtained By Concealment, Invalid

Section 143 under the Chapter VIII (Of indemnity and guarantee) of the Contract Act, 1872 of India - 'Guarantee obtained by concealment, invalid', is reproduced hereunder:—

“Any guarantee which the creditor has obtained by means of keeping silence as to material circumstances, is invalid.

Illustrations

(a) A engages B as clerk to collect money for him. B fails to account for some of his receipts and A in consequence calls upon him to furnish security for his duly accounting. C gives his guarantee for B's duly accounting. A does not acquaint C with B's previous conduct. B afterwards makes default. The guarantee is invalid.

(b) A guarantees to C payment for iron to be supplied by him to B to the amount of 2,000 tons. B and C have privately agreed that B should pay five rupees per ton beyond the market price, such excess to be applied in liquidation of an old debt. This agreement is concealed from A. A is not liable as a surety.”

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