Section 129 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 129 is a definition: a guarantee which extends to a series of transactions is called a "continuing guarantee". It matters in practice because credit lines, running accounts and repeat supply arrangements are usually secured by guarantees that are meant to cover more than one transaction. The Act gives three illustrations that show where the line falls. If you are drafting a guarantee for an ongoing relationship, our agreement drafting service can help you say clearly whether it is continuing.
A guarantee which extends to a series of transactions is called a "continuing guarantee". The Act's illustrations: a guarantee of the due collection of rents by an agent is continuing; a guarantee of payment up to £100 for tea supplied from time to time is continuing, and the surety is liable to the extent of £100 for a later supply; but a guarantee of the price of five sacks of flour delivered once is not continuing. The section only defines the term; revocation and death are dealt with in sections 130 to 132.
The text
"A guarantee which extends to a series of transactions, is called a 'continuing guarantee'."
The definition is short, and every word carries weight.
- "A guarantee": a contract of guarantee as defined in section 126; see section 126.
- "Extends to a series of transactions": the guarantee is not confined to a single transaction. It reaches a series.
- "Is called a 'continuing guarantee'": the section gives a name. It does not state the consequences of the name in this section; later sections do.
The section does not say how many transactions make a series, and it does not say that the guarantee must use the words "continuing guarantee". The illustrations show how the Act applies the test.
The Act's illustrations
| Illustration | Facts | Result |
|---|---|---|
| (a) | A, in consideration that B will employ C in collecting the rent of B's zamindari, promises B to be responsible, to the amount of Rs. 5,000, for the due collection and payment by C of those rents. | This is a continuing guarantee. |
| (b) | A guarantees payment to B, a tea-dealer, to the amount of £100, for any tea B may from time to time supply to C. B supplies tea above the value of £100, and C pays for it. Afterwards, B supplies tea to the value of £200. C fails to pay. | The guarantee was a continuing guarantee, and A is liable to B to the extent of £100. |
| (c) | A guarantees payment to B of the price of five sacks of flour to be delivered by B to C and paid for in a month. B delivers five sacks and C pays. Afterwards B delivers four sacks, which C does not pay for. | The guarantee was not a continuing guarantee, and A is not liable for the price of the four sacks. |
What the illustrations teach
- Illustration (a) is a guarantee for rent collection, an activity that will be repeated over time. Each collection is a transaction, so the guarantee extends to a series.
- Illustration (b) expressly says "any tea he may from time to time supply". The words "from time to time" point to a series. The amount limit (£100) caps the surety's liability; in the Act's illustration, that cap remains available for the later supply even though the earlier supplies had been paid for. (The Act's illustration uses pounds sterling; we keep the Act's figures.)
- Illustration (c) is a guarantee of the price of five sacks "to be delivered" and paid for in a month. It concerns one delivery. When the later delivery of four sacks is not paid for, the guarantee does not reach it.
The contrast between (b) and (c) shows that the words of the guarantee decide whether it is a single or a continuing guarantee: "from time to time ... any tea" against "the price of five sacks of flour".
A modern example (ours)
Pooja Stores buys medicines on credit from Quick Pharma Distributors every month. Pooja's brother Raghav signs a guarantee: "I guarantee payment of all invoices raised by Quick Pharma on Pooja Stores from time to time, up to Rs. 10 lakh." This extends to a series of transactions and fits section 129. Compare Sachin, who guarantees payment only of "Invoice No. 4471 dated 3 March for Rs. 2 lakh". That guarantee relates to one transaction, like the flour illustration, and is not a continuing guarantee.
What can the parties change?
Section 129 is a definition and carries no "contrary intention" words. The parties choose the shape of the guarantee: single transaction, a series, a limit on amount, a period, and the particular goods or facilities covered. The label "continuing" does not change the section; the test is whether the guarantee extends to a series of transactions. Questions about how a continuing guarantee ends are dealt with in the next sections: revocation by notice to the creditor, and the effect of the surety's death; see sections 130 to 132.
Practical points
- Say what the guarantee covers: a single invoice, a loan, or "all amounts from time to time".
- State a limit in amount and, if you want it, in time. The Act's illustration (b) uses an amount.
- Use clear words such as "from time to time" for a series and a specific description for a single transaction.
- Sureties: keep a copy and know how to end future cover; see sections 130 to 132.
- Creditors: keep a ledger that shows each transaction under the guarantee.
- For the extent of liability, see section 128. For wider reading, see indemnity and guarantee: sections 124 to 147.
Need help with a guarantee for a running account?
Whether a guarantee is meant to cover one deal or a series should be clear from its first page. Our agreement drafting team can draft the guarantee, the amount limit and the notice terms so that the creditor and the surety know where they stand. Share the credit terms and the names of the parties.
Key takeaways
- A guarantee which extends to a series of transactions is a continuing guarantee (s.129).
- The Act's illustrations: rent collection and tea supplied from time to time are continuing; a guarantee of the price of five sacks of flour is not.
- In illustration (b), the surety is liable to the extent of £100 on a later supply.
- The words of the guarantee decide whether it extends to a series.
- Revocation and the effect of death are in sections 130 to 132.
Read next
- Section 128: surety's liability is co-extensive with principal debtor
- Sections 130 to 132: revocation of continuing guarantee and primary liability
- Specimen deed of guarantee: bank and performance guarantee format
Disclaimer: Based on the text of the Indian Contract Act, 1872 as consulted on 1 October 2026. Many questions under this Act turn on case law and on the wording of the particular contract, which this article does not cover. It is general information, not legal advice; check the official text and take advice before acting.