Chapter VIII - Of Indemnity and Guarantee
Section 129
Section 129: Continuing guarantees
A continuing guarantee covers a series of transactions rather than merely one identified transaction.
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This article is for general information. Refer to the Indian Contract Act, 1872 official text for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
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 not 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.
Rule and business relevance
Repeated supplies or recurring collections can fall within a continuing guarantee if its terms extend to that series. A monetary ceiling may limit exposure without turning a recurring arrangement into a single transaction.
Limits and related provisions
Do not infer continuing coverage solely because the parties trade repeatedly. The illustration of five sacks covers that specific delivery and not a later separate supply.
Hypothetical business example
Hypothetical example: A guarantor covers purchases made from time to time within an agreed cap. Payment of the first invoice does not by itself mean later covered invoices fall outside the guarantee.
Practical decision flow
Read whether the wording covers a series or one specific obligation.
Track which transactions fall within the agreed description and period.
Apply the ceiling and any effective revocation to the transaction ledger.
Check the applicable legal framework
This guide explains the central provision. Applicable State amendments, the agreement, transaction date and other governing laws can affect its application. Check the current legal framework before relying on it for a commercial decision.
Practical checklist
Do
- Read whether the wording covers a series or one specific obligation.
- Track which transactions fall within the agreed description and period.
- Apply the ceiling and any effective revocation to the transaction ledger.
Avoid
- Do not infer continuing coverage solely because the parties trade repeatedly. The illustration of five sacks covers that specific delivery and not a later separate supply.
Glossary
- Continuing guarantee
- A guarantee extending to a series of transactions.
- Specific guarantee
- An undertaking confined to the particular obligation it describes.
Frequently asked questions
Does a monetary limit prevent a continuing guarantee?
No. The illustrations include continuing guarantees with monetary limits.
Are later supplies always covered?
No. Coverage depends on the guarantee’s terms.
Does payment of an earlier invoice necessarily end it?
Not where the undertaking continues to cover the relevant series of transactions.
Need help applying this provision to your situation?
Contact BizeneedLast updated 10 October 2026