Indian Contract Act Section 140 — Rights of surety on payment or performance

CHAPTER VIII OF INDEMNITY AND GUARANTEE

Commercial / Corporate

Summary

Once a guaranteed debt has become due, or the principal debtor has defaulted on a guaranteed duty, the surety who pays or performs everything they are liable for automatically steps into the shoes of the creditor. This means the surety gains all the legal rights that the creditor had against the principal debtor.

Official Text

Where a guaranteed debt has become due, or default of the principal debtor to perform a guaranteed duty has taken place, the surety upon payment or performance of all that he is liable for, is invested with all the rights which the creditor had against the principal debtor.