"Continuing guarantee"
Section 129 of the Indian Contract Act, 1872 deals with "Continuing guarantee". A guarantee which extends to a series of transactions, is called a "continuing guarantee". The Act came into force on 01 Sep 1872.
A guarantee which extends to a series of transactions, is called a "continuing guarantee".
Illustrations
(a) A, in consideration that B will employ C in collecting the rent of B's zamindari, promises B to be responsible, to the amount of 5,000 rupees, for the due collection and payment by C of those rents. This is a continuing guarantee.
(b) A guarantees payment to B, a tea-dealer, to the amount of £ 100, for any tea he may from time to time supply to C. B supplies C with tea to above the value of £ 100, and C pays B for it. Afterwards, B supplies C with tea to the value of £ 200. C fails to pay. The guarantee given by A was a continuing guarantee, and he is accordingly liable to B to the extent of £ 100.
(c) A guarantees payment to B of the price of five sacks of flour to be delivered by B to C and to be paid for in a month. B delivers five sacks to C. C pays for them. Afterwards B delivers four sacks to C, which C does riot pay for. The guarantee given by A was not a continuing guarantee, and accordingly he is not liable for the price of the four sacks.
Section 129, The Indian Contract Act, 1872 (Act 9 of 1872).
Related judgements & precedents
These are some judgments that construed this section, and hold precedence value. They hold authority on how to read, interpret and use this section.
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Syndicate Bank vs Channaveerappa Beleri
Court's Decision & Legal Precedent
A guarantee bond by which the sureties undertake to pay the bank 'on demand' is a continuing guarantee extending to a series of transactions, and the surety's liability under it arises only when a demand is made; limitation against the guarantors therefore runs from the date of demand and not from the principal debtor's default, and the guarantors' liability is not extinguished merely because recovery against the principal debtor has become difficult or the account has lain dormant.
On this section: Construes what makes a bank guarantee a 'continuing guarantee' within Section 129 and works out the consequences of that characterisation for when the surety's liability accrues.
The holding above is the ratio decidendi as extracted from the judgment by eCourts India, reproduced unaltered — it is a rendering of the court's reasoning, not a substitute for its words. Read the order itself before relying on it.
Judgments citing this section
These may be obiter dicta or a precedent, for you to study. These are the judgments where this section is quoted.
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… Paragraph no. 14 of the said judgement reads as under: ―14. An examination of the agreement executed between the appellant Basavaraj (since deceased) and the Bank would clearly - 41 - show it to be one of a continuing guarantee. Section 129 of The Indian Contract Act, 1872 (hereinafter referred to as "the Act") defines a continuing guarantee as ―A guarantee which extends to a series of transactions is called a ―continuing guarantee‖. Section 130 of the Act says that "A continuing guarantee may at any time be revoked by the surety, as to future …
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… The question then arises as to whether the guarantee given by the appellant is a continuing guarantee. 'Continuing Guarantee' is defined by Section 129 of the Indian Contract Act, 1872 thus: "129. Continuing Guarantee - A guarantee which extends to a series of transactions is called a "continuing guarantee"." 10. Although it may be argued that the present case does not extend to a series of transactions, the Supreme Court and this Court have held that a …
Questions about Section 129
What have the courts held on Section 129 of the Indian Contract Act?
Syndicate Bank vs Channaveerappa Beleri is the leading judgment on this section among those set out below: Construes what makes a bank guarantee a 'continuing guarantee' within Section 129 and works out the consequences of that characterisation for when the surety's liability accrues.
How do I find court cases under Section 129 of the Indian Contract Act?
In judgments and charge sheets this section is written several ways, and each form finds a different set of orders. These search the full text of every order eCourtsIndia holds, best matches first: Contract Act 129, section 129 Contract Act, section 129 of the Indian Contract Act. People searching for it also type 129 contract act. Each opens the full list of orders on eCourtsIndia, where it can be narrowed by court, year and outcome. 1 reported judgment on this section is set out on this page, beginning with Syndicate Bank vs Channaveerappa Beleri.
When did Section 129 of the Indian Contract Act come into force?
Section 129 of the Indian Contract Act, cited as Contract Act 129, came into force on 01 Sep 1872, having been enacted on 25 Apr 1872. It is in force as at the date shown on this page.
Other sections of this Act
- 73. Compensation for loss or damage caused by breach of contract1822 words
- 23. What considerations and objects are lawful, and what not596 words
- 74. Compensation for breach of contract where penalty stipulated for577 words
- 28. Agreements in restraint of legal proceeding void512 words
- 25. Agreement without consideration, void, unless it is in writing and registered, or is a promise to compensate for something done, or is a promise to pay a debt barred by limitation law423 words
- 16. "Undue influence" defined397 words
Source and method. Compiled from the enactments of Parliament and of the State legislatures as published on India Code, and republished together with commentary and other original matter under section 52(1)(q)(ii) of the Copyright Act, 1957. Structured, cross-referenced and maintained by eCourtsIndia. Text as in force on 15 Oct 2026. This page is not a substitute for legal advice.