Explain when a surety is discharged or not discharged from his liability ?

In addition to the above stated circumstances following are two more circumstances when the guarantee can be considered to have been discharged—

(i) By revocation of continuing guarantee.—Once a guarantee has been acted upon it cannot be revoked. But as exception to this general rule the provisions of Section 130 of the Indian Contract Act clearly state that a continuing guarantee can be revoked any time by the surety. Such revocation will be applicable the future transaction. Notice of this intention is to be given the creditors then only it will be effective. Therefore it can be said that when a guarantee is continuing guarantee the surety can be discharged by revocation.

(ii) By death of surety—This second mode is also applicable where the guarantee is of continuing type. When the surety of a continuing guarantee.dies guarantee comes to an end in relation to future transactions. Such death determines the guarantee and the surety is discharged. So far as the past transactions are concerned the legal heirs of the surety can be sued for such transactions.The provisions of Section 131 of the Indian Contract Act are very clear on this point.