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Three co-sureties, S1, S2 and S3, guarantee a loan of ₹12,000. They agree that, as between themselves, S1 will bear one quarter, S2 one quarter and S3 one half. The borrower pays nothing. Under the…

Question and options

Three co-sureties, S1, S2 and S3, guarantee a loan of ₹12,000. They agree that, as between themselves, S1 will bear one quarter, S2 one quarter and S3 one half. The borrower pays nothing. Under the Indian Contract Act, 1872, what are the three shares in the order S1, S2 and S3?

  1. ₹4,000, ₹4,000 and ₹4,000

  2. ₹3,500, ₹3,500 and ₹5,000

  3. ₹3,000, ₹3,000 and ₹6,000

  4. ₹6,000, ₹6,000 and ₹0

Answer and explanation

Correct answer: C - ₹3,000, ₹3,000 and ₹6,000

Section 146 provides equal contribution in the absence of a contrary agreement. The co-sureties agreed on one quarter, one quarter and one half. Applying those fractions to ₹12,000 yields ₹3,000 for S1, ₹3,000 for S2 and ₹6,000 for S3.

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