Chapter VIII
OF INDEMNITY AND GUARANTEE
Guarantee obtained by concealment invalid
143. 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 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 Taka 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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Ministry of Law, Justice and Parliamentary Affairs