Section 141 of ICA : Section 141: Surety'S Right To Benefit Of Creditor'S Securities

Explanation using Example

Imagine that Sarah acts as a guarantor for her friend Tom's loan from a bank. The bank has Tom's car as collateral. Without informing Sarah, the bank decides to release its claim on the car as collateral. Later, Tom fails to repay the loan. Under Section 141 of the Indian Contract Act, 1872, since the bank gave up the security without Sarah's consent, she is no longer liable to pay the full amount of the loan as a surety; her liability would be reduced by the value of the car that was initially held as collateral.