Indian Contract Act Section 132 — Liability of two persons, primarily liable, not affected by arrangement between them that one shall be surety on other’s default
CHAPTER VIII OF INDEMNITY AND GUARANTEE
Commercial / Corporate
Summary
Two people make a separate agreement with each other that only one of them will be responsible if the other fails to pay or perform. However, both of them have already made a contract with a third person to take on a certain liability together. The third person is not part of that separate agreement between the two.
The existence of that separate agreement does not change the liability of either person to the third person under the original contract. Even if the third person knew about the separate agreement, both people remain fully liable to the third person as originally agreed.
Official Text
Where two persons contract with a third person to undertake a certain liability, and also contract with each other that one of them shall be liable only on the default of the other, the third person not being a party to such contract, the liability of each of such two persons to the third person under the first contract is not affected by the existence of the second contract, although such third person may have been aware of its existence. Illustration