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C, advances to B, his tenant Rs. 2,000 on the guarantee of A. C has also a further security for Rs.…

This is the illustration to s.141: by cancelling the mortgage security the creditor loses it, so "A is discharged from liability" to the extent of the value of the furniture.

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C, advances to B, his tenant Rs. 2,000 on the guarantee of A. C has also a further security for Rs. 2,000 by a mortgage of B's furniture. C cancels the mortgage. B becomes insolvent and C sues A on his guarantees.

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Answer and explanation

Correct answer A

This is the illustration to s.141: by cancelling the mortgage security the creditor loses it, so "A is discharged from liability" to the extent of the value of the furniture.

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