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1The Contract Act, 1872

( ACT NO. IX OF 1872 )

Chapter VIII

OF INDEMNITY AND GUARANTEE

Surety's right to benefit of creditor's securities
141. A surety is entitled to the benefit of every security which the creditor has against the principal debtor at the time when the contract of suretyship is entered into, whether the surety knows of the existence of such security or not; and, if the creditor loses, or, without the consent of the surety, parts with such security, the surety is discharged to the extent of the value of the security.
 
 
 
 
Illustrations
 
 
 
 
(a) C advances to B, his tenant, 2,000 Taka on the guarantee of A.C has also, a further security for the 2,000 Taka by a mortgage of B's furniture. C cancels the mortgage. B becomes insolvent, and C sues A on his guarantee. A is discharged from liability to the amount of the value of the furniture.
 
 
 
 
(b) C, a creditor, whose advance to B is secured by a decree, receives also a guarantee for that advance from A. C afterwards takes B's goods in execution under the decree, and then, without the knowledge of A, withdraws the execution. A is discharged.
 
 
 
 
(c) A, as surety for B, makes a bond jointly with B to C, to secure a loan from C to B. Afterwards, C obtains from B a further security for the same debt. Subsequently, C gives up the further security. A is not discharged.

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    Throughout this Act, except otherwise provided, the words "Bangladesh", "Taka" and "Penal Code" were substituted, for the words "Pakistan" or "East Pakistan", "Rupees" or "Rs." and "Pakistan Penal Code" respectively by section 3 and 2nd Schedule of the Bangladesh Laws (Revision And Declaration) Act, 1973 (Act No. VIII of 1973).
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