Section 39 of NIA : Section 39: Suretyship

Explanation using Example

Imagine John has a bill of exchange that has been accepted by Sarah, who has agreed to pay the bill. Now, John and Sarah enter into a separate agreement that changes the terms of the original contract, such as extending the payment period for Sarah. Under the Indian Contract Act, this could release any other parties involved from their obligations. However, John can use Section 39 of the Negotiable Instruments Act to declare, at the time of the agreement, that he still intends to hold the other parties liable. By doing so, the other parties like endorsers or co-signers remain responsible for the payment of the bill, despite the new agreement between John and Sarah.