How Can a Continuing Guarantee be Revoked ?- There are two ways in which a continuing guarantee can be revoked—
I. By Notice- According to S. 130, a continuing guarantee may, any time, be revoked by the surety, as to future transactions, by notice to the creditor.
For Examples—
(i) A, in consideration of B’s discounting at A’s request, bills of exchange for C, guarantees to B, for twelve months, the due payment of all such bills to the extent of 5,000 rupees. B discounts bills for C to the extent of 2,000 rupees. Afterwards, at the end of three months, A revokes the guarantee. This revocation discharges A from all liability to B for any subsequent discount. But A is liable to B for the 2,000 rupees on default of C.
(ii) A guarantees to b, to the extent of 10,000 rupees, that C shall pay all the bills that B shall draw upon him. B draws upon C. C accepts the bill. A gives notice of revocation. A, dishonours the bill at maturity. A is liable upon his guarantee.
2. By the Death of Surety-According to S. 131, the death of the surety operates (in the absence of any contract to the contrary) as a revocation of continuing guarantee, so far as regards future transactions.
Future Transactions — It is. significant to note that a continuing guarantee can be revoked as to the future transactions only.