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A engages B as clerk to collect money for him. B fails to account for some of his receipts, and A…

Illustration (a) to section 143 holds that "The guarantee is invalid". Under section 143, a guarantee "which the creditor has obtained by means of keeping silence as to…

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A engages B as clerk to collect money for him. B fails to account for some of his receipts, and A therefore asks him to furnish security for his duly accounting. C gives his guarantee for B's duly accounting, but A does not tell C about B's previous conduct. B afterwards makes default. Can A enforce the guarantee against C?

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Correct answer A

Illustration (a) to section 143 holds that "The guarantee is invalid". Under section 143, a guarantee "which the creditor has obtained by means of keeping silence as to material circumstances, is invalid". B's earlier failure to account was the very reason security was demanded, so it was plainly material; A needed to make no false statement for his silence to defeat the guarantee.

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