Indian Contract Act, 1872 · Chapter VI: Of the Consequences of Breach of Contract · Of indemnity and guarantee
Section 139: Discharge of surety of creditor's act or omission impairing surety's eventual remedy
In plain words
If the creditor does anything inconsistent with the surety's rights, or fails to do something their duty to the surety requires, and this impairs the surety's eventual remedy against the principal debtor, the surety is discharged.
Example: A guarantees B's performance of a shipbuilding contract paid in stages. C, without telling A, prepays B the last two instalments. A is discharged.
A simplified explanation, prepared with AI assistance from the official text below and checked automatically against it for numbers and cross-references. The official text is the law and prevails over this summary. Not legal advice.
Read the in-depth explanation, with key Supreme Court rulings ↓
Official text
If the creditor does any act which is inconsistent with the rights of the surety, or omits to do any act which his duty to the surety requires him to do, and the eventual remedy of the surety himself against the principal debtor is thereby impaired, the surety is discharged.
Illustrations
(a) B contracts to build a ship for C for a given sum, to be paid by instalments as the work reaches certain stages. A becomes surety to C for B's due performance of the contract. C, without the knowledge of A, prepays to B the last two instalments. A is discharged by this prepayment.
(b) C lends money to B on the security of a joint and several promissory note made in C's favour by B, and by A as surety for B, together with a bill of sale of B's furniture, which gives power to C to sell the furniture, and apply the proceeds in discharge of the note. Subsequently, C sells the furniture, but, owing to his misconduct and wilful negligence, only a small price is realized. A is discharged from liability on the note.
(c) A puts M as apprentice to B, and gives a guarantee to B for M's fidelity. B promises on his part that he will, at least once a month, see M make up the cash. B omits to see this done as promised, and M embezzles. A is not liable to B on his guarantee.
Source: India Code (indiacode.gov.in), the consolidated text published by the Legislative Department, Government of India. Text as updated on India Code on 15 October 2026. Words in square brackets [ ] were inserted or substituted by later amending Acts, and *** marks words omitted by an amendment. The amendment footnotes are not reproduced here. Official text on India Code.
Understanding this section
Section 139 discharges the surety if the creditor does anything inconsistent with the surety's rights, or omits to do what his duty to the surety requires, and the surety's eventual remedy against the principal debtor is impaired as a result.
Examples
- Prepaying instalments to a contractor before the work reaches the agreed stages.
- Selling pledged goods negligently at a low price.
- Failing to supervise the principal debtor where the creditor had promised to do so.
Impairment of remedy
The test is whether the creditor's act or omission has harmed the surety's ability to recover from the principal debtor after paying. Mere inaction that causes no such harm does not discharge the surety.
Common mistakes
- Treating any inaction by the creditor as discharge without showing impairment.
Read with: Section 140 Indian Contract Act, 1872, Section 141 Indian Contract Act, 1872
Prepared with AI assistance as a study aid. Every ruling listed was checked against the Supreme Court's own judgments on this site, and quoted words appear in those judgments; linked names open the full judgment. Read the judgments themselves before relying on them. Not legal advice.