DEBRE MARKOS UNIVERSITY

School Of Law

Section A
GROUP ASSIGNMENT FOR GROUP NINE

Group NINE members

Name ID
Gossa Hunde 1306421
Yared Mamuye 1306554
Yisihak Ashenafi 1306585
Bemnet Abebaw 153434

Instructor: to nigus Z
Debre Markos;Ethiopia
Revocation of Contracts of Suretyship
1.1 INTRODUCTION

Revocation of contract of suretyship means cancelling of contract between a creditor

and guarantor that previously to perform in place of debtor ,if the debtor fail to discharge his
obligation.in case the guarantor that entered the contract must be binding contract with creditor.
otherwise have liability in place of debtor.

Generally, we can see about the revocation by the surety, revocation by the express notice,the
necessary requirement for revocation of suretyship like ,give notice by written form, stipulate the
identity of address and the address which it must be sent.as well as the effect of revocation of
suretyship, revocation by death or insanity, revocation of surety by co-surety, death or insanity of
a co-surety, revocation of contracts of indemnity, etc...

1.2 REVOCATION BY SURETY

Revocation and release are different. the former is defined as the right to do so, the surety may
revoke the guarantee unilaterally and the consent of creditor unnecessary to release from future
liability, but surety must have give notice .and the latter refers as, only binding if the creditor
agree to the surety request.

1.3 REVOCATION BY EXPRESS NOTICE

A contract of guarantee or indemnity may be terminated by surety or the creditor or both of them
by giving written notice.

1.4 REVOCATION IN ABSENCE OF CONTRACTUAL PROVISION

If the surety enter into continuing guarantee then the liability should continue, but he may revoke
depend on nature of his promise is divisible or entire. therefore according to general rule an offer
may be revoked at an time before it is accepted .the right revoke a continuing is include simply
by under seal or state to be for specified period . the right of cancelation is inherent
characteristics of guarantying guarantee. But it is not true at all.

1.5 THE TIME UNDERLYING CONSIDERATION

It is often the consideration of guarantee is entire or divisible is different. after more time the
prima facie consideration is indivisible and guarantee may not revoked.in case the problem most
frequently arise in the context fidelity guarantees. It has been held that a fidelity bond given to
secure the due performance of an office by the principal cannot be revoked, on the ground that
the appointment of the principal is an indivisible consideration. However, one matter which does
not appear to have been considered by the courts, and which is of particular relevance to fidelity
guarantees, is whether the surety may revoke the guarantee if the creditor has a right to terminate
the underlying principal contract by giving a specified period of notice.

1.6 SPECIFIC GUARANTEES

The surety giving notice termination is necessary in general rule. because if the creditor as
entered into an errevocable transaction on the guarantee should not deprived his security by the
revocation or cancellation.

1.7 EFFECTS OF REVOCATION

● Revocation will not affect right which have accrued prior to the date of termination.

● The guarantor may terminate his liability altogether by paying the creditor the sum autstanding
at the date of standing.

● surety is only entitled to call upon the principal to release the liabilities of the surety cannot be
revived unless their fresh agreement. The general rule are subject to a caveat in the care of
demand guarantees. the responsibility depend on question the creditor has no cause of action
against him unitil such time as the demand is made.it shall not affect the liability of the
Guarantor for the amount recoverable at the date of expiration of the notice. Consequently the
effect of the clause was to crystallise the amount of the liability of the guarantor as at the date of
expiry of the notice.

1.7.1 FORM OF NOTICE

In the absence of any express provision in the contract, the surety is not required to give any
particular form of notice, though it is obviously prudent to give notice in writing. He must ensure
that the notice is given in sufficiently precise and clear terms, if it is to be operative. A mere
expression of a wish or preference will not suffice. the guarantor wrote to the creditor stating that
he had a firm wish that no additional funds should be advanced to the principal and asked that all
efforts be made to retire the obligation. It was held that this was too equivocal to have the effect
of a notice of cancellation.

If there is an express provision which entitles the guarantor to cancel the guarantee, any notice
which he gives must clearly indicate a wish to cancel, and notice of an event from which it might
be inferred that there is a wish to cancel will not usually suffice.

1.7.2 REVOCATION BY CO-SURETY

Where there is more than one surety, the question may arise whether one of them may exercise
his right of revocation independently of the others. As a general rule, he may, unless the contract
expressly or by implication provides otherwise; and if the creditor wishes to exclude this right,
the drafting must be precise.

1.8 REVOCATION BY DEATH OR INSANITY

The effect of insanity of the surety is same as his death. The death of the surety will not revoke it
self revoke the contract of the guarantee because his life is end or no longer. but his
representative may exercise any right which the surety had to revoke the guarantee on giving
reasonable or specific notice of cancellation or termination to the creditor.

If the guarantee could not have been revoked by surety, because of the guarantee was indivisible
then it can not be revoked by his death or notice given by his personal representative.
There is also authority, that in the absence of express contractual provision, notice of death of the
surety will automatically revoke a continuing guarantee by implied notice of the death the surety
would suffice.

where the principal debtor happened to be the executor of the surety, and failed to give notice of
revocation; it was held that knowledge by the creditor of the facts sufficed to bring the guarantee
to an end.

1.9 DEATH OR INSANITY OF CO-SURETY

the event of revocation by a co-surety, essentially depends on the nature of the particular
agreement between the parties. It may be that as a matter of construction the unilateral
termination of the liability of one co-surety would operate in the same way as a release, and
discharge the co-sureties altogether.

revocation by one surety might revoke the future liability of his co-sureties. But also guarantees
that liability. the right to revoke might be treated as a wholly independent right in the case of
each co-surety, so that the exercise by one co-surety of his right of revocation will not affect the
future liability of the others. if the contract contains no provision for notice, the death of one co-
surety will not discharge the other, even though the estate of the dead co-surety may be
discharged in respect of liabilities occurring after death, once notice has been given to the
creditor. The contract may provide notice of termination must be given by all the sureties or the
personal representatives.

1.10 DEATH OR INSANITY OF THE CREDITOR OR PRINCIPAL

if the guarantee is of a type which is revocable, the death of the creditor will operate as a
revocation of the guarantee. the surety under a fidelity bond was not liable for defaults by the
principal which occurred after the death of the employer, though the employment had been
continued by his executors. Similar rules will apply in the case of the death of the principal or
one of a number of joint principals.

normally the principle of co-extensiveness will operate so as to discharge the guarantor from
liability in circumstances in which the creditor would not be entitled to claim against the estate of
the deceased principal.
1.11 REVOCATION OF CONTRACT OF INDEMNITY

There appears to be no direct authority concerning the revocation of contracts of indemnity.

Although the obligation of the surety under such a contract is a primary obligation, there is no
reason in principle why a continuing indemnity should not be subject to the same rules as a
continuing guarantee.