Rights and liabilities of co-sureties.

 Rights of Co-sureties among themselves

1. Co-sureties have liabilities among themselves under Sec. 132: 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 party not being a party to such a 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. 

2. Release: Where there are co-sureties, a release by the creditor of one of them does not discharge the other neither does it free surety so released from responsibility to other sureties (Sec.138).

3. Contribution: Co-sureties are liable to contribute equally if there is more than one surety in respect of one debt, though contracted on different dates unless contracted otherwise (Sec. 146).

4. Equality: Where the sureties are bound in different sum, they are bound to pay equally as far as the limits of their respective obligations permit (Sec. 147). 

Liabilities of Co-sureties:

Co-sureties are jointly and severally liable in India. The discharge of one co-surety from his liability does not release the other co-sureties from their liability. They are liable to bear the loss equally, subject to the limit of the debt guaranteed by him. As mentioned earlier, if one of them has paid more than his share, he can claim contribution from others. Where the co-sureties have limited their liabilities to different sums, they should contribute equally and not exceeding their respective limits. 

Illustration: A, B and C are sureties for D guaranteeing different sums namely, A Rs.10,000, B Rs.20,000 and C Rs.20,000. In case of default by D the liabilities of the co-sureties would be as under:

i) D makes default in payment to the extent to of Rs.30,000. Liabilities of A, B and C is Rs.10,000 each.
ii) D makes default to the extent to Rs.40,000. Liability shall be as of A’s 10,000 (maximum obligation), as of B and C, Rs.15,000 each being equal contribution. D makes default of Rs.70,000 A, B and C will pay the full amount of guarantee.

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 Rights of Surety Against the Principal Debtor

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