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A guarantees payment to B, a tea-dealer, to the amount of £100, for any tea he may from time to time…

Illustration (b) to section 129 holds that A's guarantee "was a continuing guarantee, and he is accordingly liable to B to the extent of £ 100". Under section 129 a…

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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, and C fails to pay. What is A's position?

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Correct answer C

Illustration (b) to section 129 holds that A's guarantee "was a continuing guarantee, and he is accordingly liable to B to the extent of £ 100". Under section 129 a guarantee "which extends to a series of transactions" is a continuing guarantee, and words like "from time to time" show that it covers later supplies too. The £100 is a ceiling on A's liability, so he does not answer for the whole £200.

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