Chapter VIII - Of Indemnity and Guarantee
Section 136
Section 136: Time extensions agreed with a third party
An agreement with a third person to give the debtor time does not itself discharge the surety under this section.
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Need advice on Section 136?
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
Where a contract to give time to the principal debtor is made by the creditor with a third person, and not with the principal debtor, the surety is not discharged.
Illustration
C, the holder of an overdue bill of exchange drawn by A as surety for B, and accepted by B, contracts with M to give time to B. A is not discharged.
Rule and business relevance
The distinction is who contracts with the creditor: this section concerns a third person, rather than the principal debtor. It should be read alongside section 135.
Limits and related provisions
Do not stop at the label of an extension letter. Check its parties and whether a separate binding agreement with the debtor or another discharge ground exists.
Hypothetical business example
Hypothetical example: A bill holder contracts with an outside person to allow the acceptor more time. The statutory illustration says the surety is not discharged by that agreement.
Practical decision flow
Identify every party to the time-extension agreement.
Check whether the principal debtor is a contracting party.
Review any separate debtor agreement and other possible discharge grounds.
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
- Identify every party to the time-extension agreement.
- Check whether the principal debtor is a contracting party.
- Review any separate debtor agreement and other possible discharge grounds.
Avoid
- Do not stop at the label of an extension letter. Check its parties and whether a separate binding agreement with the debtor or another discharge ground exists.
Glossary
- Third person
- A contracting person other than the principal debtor in this provision.
- Time agreement
- An undertaking to allow more time for the debt.
Frequently asked questions
Does this section cover a contract with the debtor?
No. Its distinction is an agreement with a third person, not the principal debtor.
Does every extension discharge a surety?
No. The parties and statutory conditions matter.
Should section 135 also be checked?
Yes, particularly if there is a separate binding arrangement with the debtor.
Need help applying this provision to your situation?
Contact BizeneedLast updated 10 October 2026