Sec. 129 of the Act defines continuing guarantee as, “a guarantee which extends to a series of transactions.” Generally, indefinite numbers of transactions are dealt in continuing guarantee. Such guarantee may be in respect of a future transaction during fixed period for example for one year.
The features of continuing guarantee are:
1. The guarantee is not exhausted by the first advance or credit or supply upto the pecuniary limit.
ADVERTISEMENTS:
2. Revocation can be made by notice to the creditor in relation to future transactions.
3. Continuing guarantee is terminated by the death of the surety as regard the future transactions.
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Revocation of Continuing Guarantee:
Following are the circumstances in which the continuing guarantee can be revoked:-
1. By notice:
According to Sec. 130, the continuing guarantee may be revoked at any time by the surety as to future transactions by due notice to the creditor.
2. By death:
ADVERTISEMENTS:
Death of the surety operates as revocation of the continuing guarantee with reference to the future transactions unless the contract otherwise provide, [sec. 131]
3. By variation in contract:
If any variation is done in the terms of contract of guarantee between the creditor and the principal debtor without the knowledge of the surety, the contract of guarantee is revoked.
4. By Novation:
The/contract of guarantee will be revoked when the parties agree to substitute a new ‘contract for the old contract or rescind or alter the old contract, [sec. 133]
5. By creditors act of omission:
Any omission by the creditor which repairs the eventual remedy of the surety against the debtor amounts to revocation of the contract of guarantee.
