The failure to perform the most important condition of a contract can discharge a guarantor from their guarantee. Additionally, a variation of the contract terms can also discharge a guarantor from their guarantee.

JUDGMENT

Lort-Williams, J. - This is an appeal from a judgment of Buckland, J., arising out of a suit upon a contract of sale of a tea garden. It appears that some time in August 1931 one S.N. Roy approached Messrs. Gillanders Arbuthnot and Co. with, an offer to purchase from them the Kaiyacherra Tea Estate as per description given by them. The terms upon which he offered to purchase were contained in a letter dated 19th August 1931. He added as postscript to his letter that Mr. P.K. Das, the present appellant, was agreeable to stand as guarantor. Subsequent to that letter, there were certain discussions between the parties, and an amended offer was made, and on 30th September 1931 Messrs. Gillanders Arbuthnot and Co., wrote saying that they could not accept the amended offer immediately, and asked Roy to leave it open till 7th October.

2. On 8th October the company wrote accepting the offer contained in the letter of 19th August, subject to modification which had been arranged verbally, regarding the payment of the purchase money. The contract provided, inter alia, that the property should be sold free from all sorts of charges and encumbrances, and that the purchase price should be Rs. 85,000 of which Rs. 15,000 were to be paid on the date of delivery of possession, Rs. 10,000 before 31st January 1932, and the balance of Rs. 60,000 in three equal instalments spread over three years. A promissory note was to be given for the balance of the purchase price, for Rs. 70,000 with interest thereon, payable on demand, and upon any default in the punctual payment of any of the instalments, the vendors were to be at liberty to enforce payment on the promissory note for the whole amount then outstanding. The amount was to be further secured by way of equitable mortgage by deposit of title deeds or by a legal mortgage. The purchase was to take effect from 10th October 1931, the date of the execution of the document, and possession was to be given on 16th October 1931, when the purchaser would make the first payment of Rs. 15,000. Then follows the condition which has become of some importance in view of what subsequently happened. Clause 4 of the agreement provides that

the tea manufactured in the garden till, then and in stock in the garden on the date of possession shaft also be delivered to me at the time, except such a stock as has previously been sold amounting to as I understand about 25 maunds.

3. Till then' obviously meant up to 16th October 1931 when possession was to be given.Clause 5 provides that Messrs. Gillanders Arbuthnot and Co. would have the property conveyed to the purchaser or his nominee, as soon after he had made payment of the first sum of Rs. 15,000 as Messrs. Gillanders' Solicitors could reasonably arrange,

and the conveyance was to contain the usual form of receipt for the whole of the purchase money, although, in fact, the purchaser would only have paid a sum of Rs. 15,000.

4. The balance of Rs. 70,000 was to carry interest, and together with the interest was to be a first mortgage on the Kaiyacherra Tea Estate, which the purchaser was to execute. The cost of stamp duty and registration fee relating to the conveyance and mortgage were to be paid by the purchaser in addition to the price of the property. The terms of Mr. Das guarantee, which was written at the foot of this contract, were as follows;

I hereby agree to stand guarantor for the due performance by Mr. S.N. Roy of the undertakings set forth above, and I agree to pay the amount outstanding on account of principal and interest immediately on being called upon by you to do so, if you do not receive payments from Mr. S.N. Roy according to the above letter, and without your first being required to take legal action for the recovery of the amount due from Mr. S.N. Roy.

5. The initial sum of Rs. 15,000 was paid by the purchaser, and possession was given on or about 16th October 1931. Default was made in payment of part of the instalment of Rs. 10,000 due on 31st