Sections 142 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.
Sections 142 and 143 protect a person who is asked to stand surety. A guarantee obtained by the creditor's misrepresentation about a material part of the transaction is invalid (s.142), and so is one obtained by the creditor keeping silence about material circumstances (s.143). If you are facing a claim on a guarantee you believe was obtained this way, our legal dispute resolution service can help you assess it.
Section 142: any guarantee which has been obtained by means of misrepresentation made by the creditor, or with his knowledge and assent, concerning a material part of the transaction, is invalid. Section 143: any guarantee which the creditor has obtained by means of keeping silence as to material circumstances is invalid. In both, the focus is on the creditor's conduct and on what is material to the transaction.
Sections 142 and 143 beside the general rules
The Act's general rules on misrepresentation and fraud are in sections 17 and 18, and the general rule on consent in section 19. See the overview free consent: sections 13 to 22. Sections 142 and 143 are the specific rules for guarantees, and they say the guarantee is invalid. This article does not go beyond the words of the two sections.
Section 142: misrepresentation
The text: "Any guarantee which has been obtained by means of misrepresentation made by the creditor, or with his knowledge and assent, concerning a material part of the transaction, is invalid."
| Limb | Plain meaning |
|---|---|
| "obtained by means of misrepresentation" | The misrepresentation must have been the means of obtaining the guarantee |
| "made by the creditor, or with his knowledge and assent" | Either the creditor made it, or someone else made it and the creditor knew and assented |
| "concerning a material part of the transaction" | It must be about something material, not a trivial point |
| "is invalid" | The guarantee has no effect |
Section 143: concealment
The text: "Any guarantee which the creditor has obtained by means of keeping silence as to material circumstances, is invalid."
Here nothing needs to be said wrongly. The creditor's silence about material circumstances is enough, if the guarantee was obtained by means of that silence. The section does not define "material circumstances"; the Act's two illustrations show what is meant.
The Act's illustrations to section 143
The Act prints both illustrations under section 143.
- Illustration (a). A engages B as clerk to collect money for him. B fails to account for some of his receipts, and A in consequence calls upon him to furnish security for his duly accounting. C gives his guarantee for B's duly accounting. A does not tell C about B's previous conduct. B afterwards makes default. The guarantee is invalid.
- Illustration (b). A guarantees to C payment for iron to be supplied by C to B up to 2,000 tons. B and C have privately agreed that B should pay five rupees per ton beyond the market price, the excess to be applied against an old debt. This agreement is concealed from A. A is not liable as a surety.
Neither illustration involves a false statement. In each the creditor said nothing about something that mattered: B's earlier failure to account in (a), and the private arrangement to repay an old debt through an inflated price in (b).
Summary table
| Section 142 | Section 143 | |
|---|---|---|
| Conduct | Misrepresentation | Keeping silence |
| By whom | The creditor, or with his knowledge and assent | The creditor |
| About what | A material part of the transaction | Material circumstances |
| Result | Guarantee invalid | Guarantee invalid |
| Illustrations | None printed | (a) clerk's earlier default; (b) hidden arrangement on price |
A modern example of our own
A distributor, Omkar Agencies, asks Parul to guarantee payment for goods supplied to a retailer. The distributor knows that the retailer has already defaulted on two earlier supplies and is in a dispute about them, but says nothing to Parul. Parul signs. Read with the Act's illustration (a) under section 143, the guarantee is invalid, because the creditor obtained it by keeping silence about a material circumstance.
A second example for section 142: the distributor tells Parul that the retailer has never missed a payment, when the distributor knows otherwise. That is a misrepresentation by the creditor concerning a material part of the transaction, and section 142 makes the guarantee invalid.
What can the parties change?
Neither section contains words such as "unless the contract provides otherwise". Each ends with the words "is invalid". The text is silent on whether a clause in the guarantee can affect this, so such a clause should be checked with advice.
What the sections do not say
- They do not list the "material circumstances" which must be disclosed.
- They do not say what the surety must prove or how.
- They do not say whether a surety who has already paid can recover; that would depend on other provisions and facts and is not covered here.
- Section 143 speaks of silence by the creditor. It does not deal with silence by someone else.
Practical points
- Creditors: disclose the debtor's relevant history and any private arrangements to the person asked to guarantee.
- Sureties: ask direct questions and record the answers in writing. Ask for statements of account and any side arrangements.
- Keep the correspondence that led up to the signing of the guarantee. Later disputes often turn on what was said and not said.
- The parties to a guarantee are defined in section 126.
Need help with a guarantee you think was wrongly obtained?
Whether a guarantee is invalid under sections 142 and 143 depends on what the creditor said or kept back and whether it was material. Our legal dispute resolution team can look at the guarantee and the history behind it and advise on the position. Bring the signed guarantee and all messages from before signing.
Key takeaways
- A guarantee obtained by the creditor's misrepresentation about a material part of the transaction is invalid (s.142).
- A guarantee obtained by the creditor keeping silence as to material circumstances is invalid (s.143).
- The Act's illustrations: an employee's earlier shortfall not mentioned; a hidden price arrangement to clear an old debt.
- The conduct of the creditor, or someone with his knowledge and assent, is what counts.
Read next
- Sections 144 and 145: co-surety joining and implied indemnity to surety
- Section 141: surety's right to benefit of creditor's securities
- Indemnity and Guarantee: sections 124–147 overview
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.