ever, made void by the statute: if the principal or surety discharges the promise the transaction is good. But if the principal does not discharge the promise, an action cannot be brought against the guarantor. The writing should show the names of the parties and the promise, but the consideration need not be stated in writing provided there is an existing consideration.

§ 190. Liability of the Surety.-The surety is liable on the default of the principal, but once the principal has committed a default the surety may be sued at once. In other words, the creditor is not obliged to sue the principal before sueing the surety, nor is he obliged to give the surety notice of default having been made, nor need he demand payment from the surety. If the surety desires to secure that the principal shall be sued first, and that he shall have notice given him of any default, and that he is not to be liable until a demand for payment is made, he must secure that suitable provisions are inserted in the guarantee.

The extent of the surety's liability depends upon the terms of the guarantee. The instrument may contain limitations as to amount or as to time. As regards time, a guarantee may be a (6 continuing" one or not.

§ 191. Continuing Guarantee.-A continuing guarantee is one that is not restricted to a single dealing. If A. guarantees the payment of any debt B. may contract in his business, not exceeding £100, A. makes himself liable for any debts not exceeding £100 which B. may from time to time contract in his business. Hence if the guarantor desires to be surety for a single dealing only, he should take care to say so.

§ 192. Fidelity Guarantee.—Guarantees are frequently given for the fidelity of a person engaged in an office, or in some employment. Care should be taken to state distinctly whether the guarantee is intended to apply to an appointment to another but similar office. As a rule, any material alteration in the duties of an office or appointment to a new office discharges the surety.

If a surety becomes bankrupt, his estate is liable under the guarantee, and the creditor may prove against it.

§ 193. Rights of the Surety.-A surety who discharges the whole or part of the debt has a right of action against the principal for what he has paid with interest. This right of action does not arise directly out of the contract of guarantee, inasmuch as that contract, is one entered into between the guarantor and the creditor: the principal is not a party to it. But when a guarantee is given by one man at the request of another, the law treats the payment of the debt by the surety as a payment at the request of the principal, and gives the surety an action against the principal for the amount paid. Where the surety pays the debt, he is entitled to the benefit of all securities which the principal may have given the creditor to secure payment.

Where there are several co-sureties, any one paying the debt has a right to compel the others to contribute their respective shares. This right arises the moment the surety has paid more than his share of the common debt. No contribution arises where the liability of each surety is limited to a given sum, inasmuch as in such a case each is bound to pay that sum and no more. The right exists only where the sureties are bound jointly or jointly and severally. The power of a surety to call on his co-sureties for contribution before he has paid anything, or where he has paid his share only, is doubtful: probably he could call upon them to give him an indemnity against having to pay more than his share.

§ 194. Discharge of the Surety. The guarantee may be void ab initio, and have no legal effect. For instance, if the consideration for which it is given fails, or if the creditor alters the instrument of guarantee after its execution in a material point, the surety is discharged.

A guarantee often contains a clause that the surety may revoke it on notice to the creditor. In such a case, notice will always discharge the surety. If the guarantee contains no such clause, the right of the surety to revoke it, depends on the nature of the guarantee. The substitution of a new agreement for the guarantee before breach will discharge the surety from all liability under the old agreement. The death of the surety, though it does not affect the liability

of his estate in respect of past transactions, will operate as a revocation, provided the guarantee could have been determined by notice. If, however, the surety could not have put an end to the guarantee by notice, his liability remains.

The conduct of the creditor may operate as a discharge of the surety. The general rule is, that if the creditor does any act to the prejudice of the surety, the guarantee is at an end. Hence any material variation from the terms of the contract made between the principal and the creditor discharges the surety, on the ground that the surety became surety on the faith of the original agreement. For instance, a building contract provided that three-quarters of the work as finished should be paid for every three months, and the remaining quarter on completion. Payments of more than three-quarters were made without the consent of the sureties before the work was completed, and it was held the sureties for the performance of the work were discharged.

The terms of the agreement between the principal and surety must also be carefully observed or fulfilled else the surety is not liable, e.g. a surety for moneys "to be received" by another is only liable for moneys actually received by that other.

A surety is discharged if the creditor without his consent extends the time originally fixed for payment, even though no injury actually accrues to the surety. The agreement to give time must, however, be one that the principal could enforce. We have seen that unless the extension of time given by a creditor to a debtor is supported by a consideration, the creditor is not bound to wait, but may sue at once. In such a case there is an agreement without a consideration, i.e. there is no contract. Even if the creditor agrees with the principal to give the surety an extension of time, the surety is discharged, because the right of the surety to pay the debt and sue the principal is affected. The surety by a contract made between himself and the creditor may secure time for payment provided he gives some consideration. Any

negligence of the creditor in doing what he is legally bound to do, by reason of which the position of the surety is made worse, will discharge the surety: for instance, not presenting a bill of exchange for payment when it became due, and the parties liable to pay subsequently became insolvent. A surety, as we have seen, is on payment of the debt entitled to the securities held by the creditor. The creditor is bound to use due diligence in taking care of such securities, and if he lose them the surety is discharged. The guarantee may also come to an end by payment of the debt by the principal and by release of the debt by the creditor.

When default is made by the principal, the surety should be sued within six years if the guarantee is not under seal, twenty years if it is under seal, otherwise the right of action is extinguished by the Statute of Limitations.

§ 195. Authorities.

Colyar on Guarantees.

Smith's Mercantile Law; De

CHAPTER VI

CHARTER-PARTIES AND BILLS OF LADING

§ 196. Charter-parties and Bills of Lading.—A merchant who is shipping goods may either ship them as part of a cargo or may hire an entire vessel where the goods are sufficient to fill the vessel. In the latter case the goods may not be his own, as for example where he takes the risk of collecting a cargo from various exporters. Where an entire ship is hired, a formal document embodying the agreed terms is prepared, called a charter-party. Where goods are shipped as part of a cargo, the contract may be a verbal one or it may be collected from the notices issued by the shipping company; but on the delivery of the goods on board, a receipt, called a bill of lading, is given by the shipowner or his agent, and though this bill of lading is not the contract itself, it is evidence of the contract. A bill of lading contains the conditions upon which the shipowner receives the goods for carriage, and as the form of bill of lading used by every leading company is well known, shippers who send goods to be carried will usually be taken to have agreed to the bill of lading.

By a charter-party the charterer usually secures the use of the vessel and the services of a master and crew for a particular voyage. By a bill of lading the shipper secures a receipt for the goods, which may be endorsed and delivered to another party, who thereby takes the property in the goods and acquires the same rights and liabilities as if it were originally issued to him.