BUSINESS ADMINISTRATION
BUSINESS LAW
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Discharges the other co-sureties
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Does not discharge the other co-sureties
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Makes all the co-sureties immediately liable
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Make all the co-sureties not immediately liable
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Detailed explanation-1: -Section 138: Release of one co-surety does not discharge others. 138. Where there are co-sureties, a release by the creditor of one of them does not discharge the others; neither does it free the surety so released from his responsibility to the other sureties1.
Detailed explanation-2: -136. Surety not discharged when agreement made with third person to give time to principal debtor.-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.
Detailed explanation-3: -For instance, in the case where the amount of the principal debtor gets reduced to the application of the debt relief act, the surety will be liable only for the reduced amount. However, in case the principal debtor is discharged from the liability in case of insolvency, the surety is not discharged.
Detailed explanation-4: -Surety’s rights against the co-sureties As per Section 138 when the principal debtor fails to pay the debt and if the creditor asks only one surety to fulfil his duty. In this case that surety can ask the other co-sureties to fulfil their responsibility.