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Rights of Surety

Rights of surety may be classified into three categories: rights against the creditor, rights against the principal debtor, and rights against co-sureties. Rights against the creditor include directing the creditor to dismiss an employee whose honesty was guaranteed if proven dishonest, and the surety is exonerated if the creditor fails to do so. For rights against the principal debtor, if the surety pays the debt or performs the duty due to the principal debtor's default, the surety is subrogated to have all the creditor's rights against the principal debtor.

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Gopalakrishnan Kuppuswamy
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566 views1 page

Rights of Surety

Rights of surety may be classified into three categories: rights against the creditor, rights against the principal debtor, and rights against co-sureties. Rights against the creditor include directing the creditor to dismiss an employee whose honesty was guaranteed if proven dishonest, and the surety is exonerated if the creditor fails to do so. For rights against the principal debtor, if the surety pays the debt or performs the duty due to the principal debtor's default, the surety is subrogated to have all the creditor's rights against the principal debtor.

Uploaded by

Gopalakrishnan Kuppuswamy
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Rights of surety may be classified under three heads: Rights against the creditor Rights against the principal

debtor Rights against co-sureties Rights against the creditor In case of fidelity guarantee, the surety can direct a creditor to dismiss the employee whose honesty he/she has guaranteed, in the event of proven dishonesty of the employee. The creditors failure to do so will exonerate the surety from his/her liability. Rights against the principal debtor Right of subrogation Section 140 provides that where a surety has paid the guaranteed debt on the due date or has performed the guaranteed duty on the default of the principal debtor, he/she is invested with all rights that the creditor has against the debtor. In other words, the surety is subrogated to all rights that the creditor had against the principal debtor.

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